The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0842 ET - Latin American and European customers would be the hardest hit by a potential ban on U.S. diesel exports, according to Capital Economics, but the impact on global prices would be felt everywhere. "Any reduction in the flow of diesel from the U.S. would weaken one of the key offsets that has helped to ease the woes currently facing the global diesel market," says David Oxley, chief commodities economist. This year's boost in U.S. diesel exports has helped offset around half of the loss of global supplies caused by disruptions to Russian refineries and the Iran war. A full ban could reduce seaborne global supply by a further 30%, Capital Economics estimates. (giulia.petroni@wsj.com)
0743 ET - European indexes turn negative after initially opening higher, as an upturn in oil prices weighs on sentiment. Banks and technology stocks lose their early momentum to trade lower, with the Europe-wide Stoxx 600 falling 0.5%. London's FTSE 100 slips 0.2%, while the French CAC 40 drops 0.3%. Losses are most heavy for the German DAX, with the energy-sensitive index dropping 0.8%. Chip maker Infineon Technologies drops 2.7%, while autos in the index also slide. Insurer Allianz loses 3.3%, as companies that benefit from consumer inertia fall on investor concern around the impact of AI agents. The Italian FTSE MIB and Spanish IBEX 35 both drop by 0.6%. The Dutch AEX is 0.5% lower.(josephmichael.stonor@wsj.com)
0522 ET - A targeted U.S. diesel export restriction could provide some near-term relief to domestic fuel prices while avoiding the disruption of a complete export ban, says Michelle Brouhard from Kpler. Export controls would be more complicated to administer than a blanket ban, requiring Washington to determine and monitor volumes, licenses, exemptions and, potentially, destinations. At the same time, they would give policymakers greater flexibility over how many barrels remain in the U.S. and which foreign buyers retain access. According to Kpler, limiting exports by 500,000 barrels a day, rather than the full 1.2 million barrels a day, would leave more fuel in the U.S. market while allowing roughly 700,000 barrels a day to continue reaching overseas buyers. (giulia.petroni@wsj.com)
0451 ET - China's crude imports are expected to stay low in the coming months if oil prices remain elevated, analysts at Goldman Sachs say. Seaborne imports are currently about 3 million barrels a day below seasonal norms, despite a modest pickup in September. According to the U.S. bank, imports could increase by about 600,000 barrels a day in the fourth quarter mainly due to seasonal factors and refineries exporting more refined products while drawing down inventories more slowly. Despite the increase, imports are still forecast to be more than 3 million barrels a day lower than a year ago. "We continue to view a possible escalation of strikes on Mideast crude production and export infrastructure--not higher China imports--as the main upside risk to our crude price forecast," the analysts say. Goldman sees Brent at $85 a barrel in December. (giulia.petroni@wsj.com)
0430 ET - A diesel export ban in the U.S. could force refineries to produce less fuel of all types and further raise domestic prices, according to the American Petroleum Institute. "If diesel exports were blocked, surplus fuel could start filling storage on the Gulf Coast," the trade association says. "As storage tanks are filled, the only way to avoid producing even more surplus diesel would be to process less crude oil." As a result, refineries would produce less gasoline, jet fuel and other products at a time when global supplies are tightening. "The impacts could extend far beyond pain at the pump, to dire consequences for international supply chains, agriculture, shipping, manufacturing and the entire global economy," the API says. (giulia.petroni@wsj.com)
0429 ET - The Bank of England could come under pressure to increase interest rates following recent rate increases by central banks in the U.S., Japan and Europe, Tickmill Group's Patrick Munnelly says in a note. Concerns about high oil prices and inflation risks have caused major central banks to move towards rate rises. Markets price in three or more rate increases by each of the key central banks over the next year, LSEG data show. "Once the Fed, ECB and BoJ are all responding to the energy shock with tighter policy, it becomes harder for markets to believe the BOE can sit this cycle out," he says. (miriam.mukuru@wsj.com)
0350 ET - The possibility of the Bank of England increasing interest rates in November remains due to inflation concerns as oil prices are still fairly elevated, Tickmill Group's Patrick Munnelly says in a note. The recent decline in energy prices hasn't been sufficient to alter market expectations of a BOE rate rise in November, he says. Investors price a 66% chance of a BOE rate increase at the November meeting, unchanged from last week, LSEG data show. "Unless Middle East diplomacy produces a material and sustained fall in energy prices, the market is likely to keep some probability of a November hike embedded," Munnelly says. (miriam.mukuru@wsj.com)
0342 ET - Singapore inflation risks remain tilted to the upside, keeping the next central bank meeting live, ING economists say. Core inflation strengthened in August, and ING reckons it will accelerate further in the coming months as U.S.-Iran conflict uncertainty will likely keep global energy prices elevated. That boosts the risk of further pass-through into Singapore goods and services prices, ING's Deepali Bhargava says. A severe El Niño weather shock could also push up imported food costs--an acute pain point given Singapore's heavy reliance on imports. Robust AI-related investment activity could meanwhile stoke inflation on the services front. MAS surprised markets by tightening slightly in July, and ING doesn't rule out a further modest move in October. (fabiana.negrinochoa@wsj.com)
0321 ET - Yields on U.K. government bonds, or gilts, drop as oil prices retreat, easing concerns about inflation. Brent crude falls 0.8% to $98.45 a barrel due to prospects of a U.S.-Iran deal after Kyodo News on Tuesday reported that Iran said it would reopen the Strait of Hormuz within seven days if the U.S. lifts its blockade. Ten-year gilt yields fall 1.4 basis points to last trade at 5.209%, Tradeweb data show. (miriam.mukuru@wsj.com)
0310 ET - Bitcoin rises as risk sentiment improves on hopes for diplomacy in the Middle East conflict. President Trump said on Tuesday that U.S. officials had a "very good meeting" with Iran on the sidelines of the United Nations General Assembly in New York. Saudi Arabia, meanwhile, began running tests on its East-West pipeline on Tuesday in a step toward restoring flows as soon as this week after the pipeline was damaged by attacks earlier this month, the Wall Street Journal reports. Bitcoin rises 0.3% to $86,502, having reached its highest level since late January on Monday at $87,315, LSEG data show. (renae.dyer@wsj.com)
0250 ET - Oil prices fall in early European trading on hopes for a diplomatic solution to the Middle East war and as Saudi Arabia began efforts to restart a critical pipeline. Brent crude slips 0.9% to $98.42 a barrel, while WTI futures are down 1.4% to $89.28 a barrel. President Trump on Tuesday told reporters that U.S. and Iranian delegations had "a very good meeting." Meanwhile, Saudi Arabia is running tests on its East-West oil pipeline as flows could be restored as soon as this week. "Markets are increasingly pricing gradual de-escalation, although geopolitical developments remain fluid and vulnerable to renewed tensions," analysts at brokerage Kotak Neo say. (giulia.petroni@wsj.com)
0240 ET - The dollar rises to an almost eight-week high against a basket of currencies, driven by expectations the Federal Reserve could raise interest rates further. The market assigns a 53% chance of another Fed rate rise in October and prices 78 basis points by September 2027, LSEG data show. These expectations are overriding an easing of oil prices on hopes for a de-escalation in the Middle East conflict, which is usually negative for the currency given America's position as a net oil exporter. The DXY dollar index rises to a high of 100.763.
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