The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
1054 GMT - Morgan Stanley raised its bullish price scenario for European natural gas to 150 euros a megawatt-hour from 135 euros, citing colder November forecasts, firm Asian LNG demand and geopolitical risks that could tighten winter supplies. TTF prices already climbed above 100 euros a megawatt-hour last week. Europe is entering winter with gas storage at just 73% of capacity, well below the 10-year seasonal average of 90%, leaving the market vulnerable to colder weather and sharp price swings. Strong Asian demand is also making it harder for Europe to attract additional LNG cargoes, increasing the risk of tighter supplies in the first quarter. Morgan Stanley has kept its winter average price forecast at 90 euros a megawatt-hour but says risks remain tilted to the upside, particularly if colder weather accelerates storage withdrawals. (giulia.petroni@wsj.com)
1052 GMT - Yields on U.K. government bonds, or gilt, fall to multiweek lows as declining oil prices cause inflation fears to subside. Ongoing Iran peace talks are enabling oil prices to retreat, contributing to improved market sentiment. "The [energy prices] pullback moderates the immediate geopolitical risk premium," Tickmill Group's Patrick Munnelly says in a note. Investors have also slightly scaled back their expectations for Bank of England interest-rate rises to 106bps by the end of 2027, down from 119bps last week, LSEG data show. Ten-year gilt yields fall to 5.219%, a nearly six-week low, while 30-year gilt yields drop to their lowest in more than 12 weeks at 5.646%, LSEG data show. (miriam.mukuru@wsj.com)
1027 GMT - Brent crude prices could reach $140 a barrel and average around $130 next year if Gulf oil production remains significantly below prewar levels, according to Goldman Sachs. In this upside scenario, output would be 3.5 million barrels a day below its 2025 average, compared with 1.1 million barrels a day above that level in the bank's base case. "The most likely price-upside triggers are intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium," analysts at Goldman say. Brent could, however, fall into the $60s if Gulf production recovers faster than expected, rising to 2.5 million barrels a day above 2025 levels, in the event that the U.S. and Iran reach a deal that markets perceive as sustainable. (giulia.petroni@wsj.com)
1014 GMT - Palm oil futures end lower, tracking weakness in crude prices. Weaker oil prices weigh on palm oil's appeal as a biodiesel feedstock. Sentiment also remains cautious amid expectations of rising October stockpiles and uncertainty around a potential Malaysian export tax waiver, say Kenanga Futures analysts in a note. They peg the support and resistance levels for the January futures contract at 4,630 ringgit and 4,750 ringgit, respectively. The Bursa Malaysia Derivatives contract for January delivery declines 31 ringgit to 4,650 ringgit a metric ton. (megan.cheah@wsj.com)
0900 GMT - Apollo Global Management CEO Marc Rowan says you cannot be AI sovereign without three things: models, chips and energy. "That's where we are," he says in an interview with WSJ Leadership Institute. "And almost everyone is short energy." Rowan says a very large percentage of--probably about $50 billion to $75 billion of the up to $500 billion in financing Apollo plans to originate this year--will go toward energy. Beyond energy, Rowan says the other piece of the AI boom that Apollo feels comfortable financing is chips. "I believe you can finance chips safely because chips are in short supply," he says. "Today, you can look out and say for the next five years, just like we're short energy, we're short chips." (connor.hart@wsj.com)
0958 GMT - The Norwegian krone falls along with oil prices on optimism over diplomatic efforts to end the U.S.-Iran conflict. President Trump said at the weekend that negotiations with Iran to end the war were "going fine" while U.S. Secretary of State, Marco Rubio, said the U.S. was open to a diplomatic solution. Brent crude drops more than 4% to $108.61 per barrel. The krone has a strong positive correlation to oil prices as Norway is a major oil and gas producer. The euro rises more than 1% to 10.3660 krone, LSEG data show. (renae.dyer@wsj.com)
0958 GMT - BP's management must finish the job of shoring up the balance sheet before it can consider share buybacks, UBS's Joshua Stone writes. After earnings that beat expectations for the third time this year, investor attention will turn to December's strategy update, the analyst says. A financial framework that will remain resilient in a lower price environment is expected, he adds. Shares fall 1.7% to 616.80 pence. (adam.whittaker@wsj.com)
0943 GMT - The dollar falls to a one-month low against a basket of currencies as oil prices ease significantly. Renewed diplomatic efforts to end the U.S.-Iran conflict ease concerns over Middle East supply disruptions, sending Brent crude down 4% to 108.91 per barrel. Investors are also looking ahead to the U.S. midterm elections on Tuesday along with tech earnings this week and the all-important U.S. nonfarm payrolls report on Friday. The DXY dollar index falls to as low as 101.426. The euro rises to an 11-day high of $1.1237, according to LSEG. Sterling rises a near seven-week high of $1.3449. (renae.dyer@wsj.com)
0937 GMT - Sterling faces some possible consolidation against the euro after its recent sharp appreciation but it is too early to expect a significant correction, ING's Chris Turner says in a note. Elevated energy prices should keep expectations for higher U.K. interest rates in place until early next year while French budgetary problems remain unresolved, he says. A potential 25 basis-point rate increase by the Bank of England on Thursday looks like a done deal, he says. "Upside economic surprises, U.K. fiscal policy seemingly heading in the right direction and warmer ties with the EU all seem to be helping sterling too." The euro rises 0.2% to 0.8355 pounds after hitting a 19-month low of 0.8317 Friday, LSEG data show. (renae.dyer@wsj.com)
0937 GMT - Goldman Sachs raises its oil price forecasts, saying persistent Middle East supply risks are expected to sustain a sizable geopolitical risk premium in the near term. "We now expect markets to price in a higher risk premium, reflecting downside risks to Mideast supply, the length of past major oil supply shocks, and many market participants' view that a lasting diplomatic breakthrough will be difficult," analysts at the bank say. Goldman now expects Brent to average $105 a barrel in December 2026 and $88 in 2027, up from previous forecasts of $90 and $80, respectively. The bank estimates that a geopolitical risk premium of around $27 a barrel accounted for most of October's oil price rally, while Brent's fair value remained broadly stable in the $90s, as global inventories--a key driver of prices--were little changed. (giulia.petroni@wsj.com)
0933 GMT - The dollar's potential to fall on the prospect of a Democratic sweep in Tuesday's midterm elections looks limited, ING's Chris Turner says in a note. One could argue that the dollar should fall on such an outcome as it would likely lead to a gridlock on the debt ceiling, a prolonged government shutdown next year and possibly encourage President Trump to pursue an even more activist foreign policy agenda, he says. "Many of those views are speculative, however." What isn't speculative is strong U.S. economic growth, high inflation and the Federal Reserve ready to raise interest rates again, he says. The DXY dollar index falls 0.3% to a 10-day low of 101.530. (renae.dyer@wsj.com)
0927 GMT - The retreat in oil prices eases inflation concerns, causing markets to slightly scale back expectations of interest-rate rises by major central banks. Brent crude falls 4.1% to $108.83 a barrel due to renewed diplomatic efforts to end the conflict between the U.S. and Iran. "Lower energy prices are providing some relief to inflation expectations and broader market sentiment, particularly after October's substantial rally in crude," Capital.com's Daniela Hathorn says in a note. U.K. government-bond yields fall sharply amid lower oil prices and by more than their eurozone counterparts, with 10-year gilt yields dropping around 5 basis points to a six-week low of 5.228%, LSEG data show.
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