The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0650 GMT - 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)
0640 GMT - 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. (renae.dyer@wsj.com)
0639 GMT - U.S. Treasury yields and eurozone government bond yields fall in European opening trade as oil prices decline on the prospect of a deal between the U.S. and Iran. "Markets continue to err on the side of new momentum for diplomacy between the U.S. and Iran on breaking the energy-choking deadlock," analysts at KBC Bank said in a note. Investors await key input from flash estimate purchasing managers data for September. The 10-year U.S. Treasury yield falls 2.2 basis points to 4.944%, while the 10-year German Bund yield declines 1.3 basis pionts to 3.436%, according to Tradeweb. (emese.bartha@wsj.com)
0551 GMT - Bond markets could open in a reasonably good mood in Europe amid the prospect of diplomatic progress between the U.S. and Iran. This, along with Saudi Arabia moving to restart its East-West pipeline, has helped oil prices fall and reduce the upward pressure on bond yields. "Geopolitics remains center stage for markets," Jefferies' Mohit Kumar says in a note. "There is increased optimism that the U.S. and Iran may be moving towards some form of an agreement," the global economist says. (emese.bartha@wsj.com)
0500 GMT - Fitch Ratings expects the oil market to return to a substantial surplus in 2027. While it expects oil prices to fall next year, Fitch has raised its 2027 forecast for oil to US$70 a barrel from $65 a barrel to reflect the longer-than-anticipated Middle East conflict and the implications for the geopolitical risk premium. Analysts Brian Coulton and Alex Muscatelli acknowledge a high level of uncertainty around these projections. Assuming a deal between the U.S. and Iran takes shape in 1Q of 2027, supply and demand fundamentals could play a bigger role in determining oil prices. On the upside, geopolitical uncertainties could result in oil prices averaging $85 a barrel next year, while on the downside, a rapid recovery in supply could see prices fall to $55 a barrel, they say in a report.
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