The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.
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. (miriam.mukuru@wsj.com)
0911 GMT - Oil prices drop more than 3.5% ahead of the U.S. midterm elections as diplomatic discussions involving Qatari mediators over a potential deal to reopen the Strait of Hormuz ease the risk premium. However, concerns over a possible resumption of U.S. military strikes on Iran remain elevated. "The price action in oil in recent weeks reflects a market increasingly bracing for the potential for more hostilities between the U.S. and Iran," analysts at ING say. "Given that many of the key developments in this conflict have unfolded over weekends, the market may have to hold its breath until the end of the week." In early European trading, the front-month Brent crude contract slides 3.9% to $109.04 a barrel, while WTI futures drop 4% to $99.94 a barrel. (giulia.petroni@wsj.com)
0906 GMT - BP's valuation discount could shrink as cash flows improve and investors get more visibility on upstream growth projects, Berenberg analysts write. The British energy major's efforts to cut net debt will remain central to its December strategy update, they say. Where BP allocates spending across its upstream portfolio and an update on its Brazilian exploration efforts will also be in focus, they say. Shares fall 1.4% to 618.50 pence. (adam.whittaker@wsj.com)
0830 GMT - Reliance Industries keeps its bull at Nomura following stronger-than-expected 2Q earnings, driven by the standout performance of the Indian conglomerate's oil-to-chemicals business. Segment Ebitda was a record 252 billion rupees, up 68% on year and 48% on quarter--and 24% ahead of Nomura's estimates. "With cracks broadly stable quarter on quarter at multidecade highs...the sequential jump came from a lower crude basket cost, better margin capture and higher throughput," analysts Bineet Banka and Abhishek Bhandari write in a note. The segment's Ebitda margin rose 2.5 percentage points on quarter to 10.9%. Nomura raises its FY 2027 Ebitda forecast for Reliance by 2% and reiterates a buy rating. However, it lowers the stock's target price by 7.7% to 1,560 rupees due to a roll-forward adjustment. Shares rise 7.6% to 1,252 rupees. (farah.elias@wsj.com)
0821 GMT - Cnooc's H shares remain undervalued and offer a 2026 dividend yield above 6%, Morningstar's Chokwai Lee says in a note. The Chinese oil and gas producer recorded strong results for the first nine months of the year, supported by high oil prices, while its expansion strategy remains intact with a disciplined approach to overseas growth, Lee says. Net production was in line with expectations, and Cnooc remains cost competitive, Lee adds. Supply disruptions to energy is expected to continue into 2027, supporting elevated oil and gas prices in the near term, Lee says. Morningstar retains its fair-value estimate for A shares at 28.00 yuan but raises it to HK$33.00 from HK$32.00 for H shares, reflecting the Chinese yuan's appreciation. The H shares close at HK$24.52. (kimberley.kao@wsj.com)
0815 GMT - European energy majors start the week lower after oil prices drop nearly 3%. Renewed diplomatic efforts to end the conflict between the U.S. and Iran have helped ease supply concerns. Brent crude futures for January delivery fall 2.85% to $110.23 a barrel, while U.S. West Texas Intermediate futures for December delivery drop 3.3% to $100.72 a barrel. This pulls BP down 2.4% and Shell 1.3% lower. Spain's Repsol falls 1.5% while France's TotalEnergies slides 1%. (adam.whittaker@wsj.com)
0810 GMT - No major changes in Israeli economic policy are expected irrespective of how the current political dynamics play out over the coming months, J.P. Morgan's strategists say. Israel's national legislative Knesset elections surprised last week with stronger results for both Prime Minister Benjamin Netanyahu and the country's Arab parties. JPM forecasts two outcomes: an election re-run in 2027, which would be negative for risk assets, or a unity government, which would be more positive. "Increased market optimism and currency strength would imply wider room for the Bank of Israel to ease policy," the strategists say, adding there is less room for such an outcome since the vote. "We see a substantial risk that the last 25 basis points cut of the cycle, which we have penciled in for November, will never be delivered."(joseph.wilkins@wsj.com)
0806 GMT - Spain's Repsol will get a boost from elevated refining margins into 2027 that will likely drive consensus estimates higher, Berenberg analysts write. This could then drive another strong year for shareholder distributions, they say. The analysts raise their 2027 refining indicator margin estimate to $15 a barrel from $12, which drives an 11% increase in the bank's adjusted net income estimate. Shares fall 1.2% to 30.35 euros.(adam.whittaker@wsj.com)
0625 GMT - The risk-reward to being tactically long in European government bonds has increased even as risks toward higher energy prices remain, RBC Capital Markets analysts say in a note. "One could envisage a tactical bond market rally from here in both a scenario where energy surges higher (say on a geopolitical escalation) or starts falling again (in a de-escalation)," they say. RBC Capital Markets has been bond bears for quite some time now and doesn't think that the structural backdrop behind the current yield levels has changed. "Tactically, however, we think the market might well correct further, and it remains to be seen how resilient economic activity in the face of elevated rate-hike expectations and bond yields remain going forward."
Comments