The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
0942 ET - Celestica is riding a massive surge in Big Tech AI spending, but scaling up requires significant capital. On an investor call, CFO Todd Ankenmann says that sales in the company's AI server and data storage division spiked 242%, handily topping internal expectations of roughly 190%. This was "driven by ramping volumes in hyperscaler AI compute and complemented by stronger-than-expected demand in storage programs." Tech giants have been deploying AI compute hardware, pushing up demand for data storage, and Celestica has been building up early volume ramps for next-generation 1.6T networking switches. To support this momentum into 2027, Celestica plans to channel cash into a $1.1 billion quarterly inventory buildup, trimming its near-term free cash flow outlook to fund production scaling. (adriano.marchese@wsj.com)
0928 ET - The building of alternative pipelines to export Iraqi oil is no substitute for reopening the Strait of Hormuz, according to Iraq energy expert Howar Talabany."Pipelines are a good way to diversify but it cannot replace a port, because you are still at the mercy of another country that has its own domestic requirements," she says. The Kurdistan-Turkey pipeline network offers an alternative passage for Iraqi oil through the Mediterranean port of Ceyhan, but comes with risks. "Pipelines are much easier to target than ships as they are stationary infrastructure, which makes them very exposed," she adds. (joseph.wilkins@wsj.com)
0922 ET - UBS raised its Brent crude forecast for this year and next as Middle East flows are threatened by persistent attacks on shipping. "Higher oil flows have not translated into a normalization of the market," says strategist Giovanni Staunovo. "Vessels remain exposed to attacks, insurance and freight costs have risen sharply, and increased ship-to-ship transfers required to cross the Strait of Hormuz are absorbing tanker capacity." UBS now forecasts Brent at $110 a barrel by the end of 2026 from $100 a barrel previously. It also lifted its forecasts for next year by $10 a barrel, saying it sees the global oil benchmark at $95 a barrel in March, $90 a barrel in June and $85 a barrel in September. (giulia.petroni@wsj.com)
0734 ET - The Norwegian krone hits a four-year high against the Swedish krona and could appreciate further as energy prices look set to keep rising due to geopolitical supply disruptions, Morgan Stanley strategists say in a note. "Norway's net energy exports and Sweden's net energy imports provide a clear fundamental rationale, while shared regional exposure reduces the influence of broader risk sentiment." The Norges Bank is unlikely to lean against the Norwegian krone's strength, allowing it to remain one of the higher yielding currencies in the G-10, they say. Morgan Stanley recommends buying the Norwegian krone versus the Swedish krona, targeting 1.125 with a stop loss of 1.030. The Norwegian krone rises to as high as 1.0703 Swedish krona. (renae.dyer@wsj.com)
0634 ET - The sharp increase in energy prices caused by the U.S.-Iran conflict will have lasting negative effects on Europe, but will likely benefit energy infrastructure companies, BlackRock strategists write. Buffers that absorbed the initial energy shock earlier this year are weakening, and Europe is especially exposed, they say. Europe's GDP is 0.5% lower than it otherwise would be without higher energy prices, they say. Infrastructure that protects against future shocks will be increasingly in demand, the strategists say, raising investment opportunities in the space. U.S. and European utilities' stocks look attractive after suffering from rising bond yields, they add. (josephmichael.stonor@wsj.com)
0510 ET - Oil supplies through the Strait of Hormuz remain significantly below prewar levels, but broader Middle Eastern crude exports to international markets have proved resilient, running above prewar levels despite heightened geopolitical risks. According to data provider Kpler, the seven-day average of Hormuz oil flows stands at 9.34 million barrels a day, around 54% of the prewar baseline of 17.15 million barrels a day. Still, non-Iranian Middle Eastern crude supplies to international markets averaged 16.7 million barrels a day so far in October, compared with 16.3 million barrels a day before the war. (giulia.petroni@wsj.com)
0437 ET - Oil prices rebound in early European trading after falling earlier in the session, as traders focus on diplomatic efforts to avert further escalation between the U.S. and Iran. The December Brent crude contract, which expires on Friday, is up 0.9% to $116.85 a barrel, while WTI futures rise 0.9% to $102.73 a barrel. A sustained decline in prices would likely require credible signs of de-escalation from all sides involved in the conflict and tangible progress toward restoring safe shipping through the Strait of Hormuz. Meanwhile, "upcoming elections in the U.S. and Israel add another layer of uncertainty, potentially complicating diplomatic efforts and keeping a geopolitical risk premium embedded in prices," analysts at Saxo Bank say. (giulia.petroni@wsj.com)
0423 ET - Galp Energia posted a good operational performance with beats across the board and a guidance upgrade, but it wasn't enough to stop a share selloff, Berenberg's James Carmichael writes. Shares closed 11% lower Monday after talks with Moeve on a merger of their downstream operations ended. Despite this, Berenberg keeps its 22 euro share price target and hold rating on the Portuguese company's stock unchanged. Shares fall 1.16% to 20.25 euros. (adam.whittaker@wsj.com)
0356 ET - The dollar rises to a 12-day high against a basket of currencies as oil prices rally due to concerns about continued Middle East conflict. "Geopolitics remains the focus with market concerns that Trump could consider another round of strikes around or after the mid-terms," Jefferies economist Mohit Kumar says in a note. Higher oil prices strengthen the case for monetary policy tightening ahead of the Federal Reserve's decision Wednesday. While the market largely expects the Fed will keep rates steady, a move is nearly fully priced for December with further tightening expected next year. Higher oil prices also benefit the dollar because the U.S. is a net oil exporter. The DXY dollar index rises 0.2% to as high as 102.207. (renae.dyer@wsj.com)
0142 ET - Malaysia's renewable-energy sector is poised for growth, with the rollout of two major solar programs expected to generate 18 billion ringgit-28 billion ringgit in project opportunities over 2027-2028, Maybank IB analyst Thong Kei Jun says in a note. Rising demand from data centers for cleaner power and potential savings on electricity costs could further boost projects under a scheme that allows companies to buy renewable electricity directly from power producers, he says. Thong favors established solar developers with proven execution records, naming Solarvest and Samaiden as the sector's top picks. Solar interconnection and grid upgrades could also benefit power infrastructure players, including MN Holdings and Kee Ming. Maybank maintains a positive rating on the Malaysian renewable-energy sector.
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