MARKET MOVEMENTS:
–Brent crude oil is up 1% at $71.69 a barrel
–European benchmark gas is up 1.8% at 43.29 euros a megawatt-hour
–Gold futures are up 0.3% at $2,764.70 a troy ounce
–LME three-month copper futures are down 0.1% at $9,544.00 a metric ton
TOP STORY:
BP’s Profit Hits Four-Year Low on Commodity Market Weakness
BP’s profit tumbled in the third quarter, although less than expected, as weak oil prices and refining margins continue to weigh on the energy sector.
The British oil-and-gas giant on Tuesday said it booked an underlying replacement-cost profit–a proxy for net profit–of $2.27 billion for the quarter, down significantly from the $3.29 billion it reported for the same period last year. However, this beat a market consensus of $2.05 billion provided by the company.
Still, the result is the London-based company’s lowest in nearly four years, since the pandemic crippled earnings. This adds pressure on Chief Executive Murray Auchincloss as BP’s shares lag those of its rivals amid concerns about its long-term strategy.
OTHER STORIES:
Quantum Capital Amasses $10 Billion for Energy Bets
Quantum Capital Group has rounded up a total of more than $10 billion for funds and co-investments in the energy sector across multiple investment strategies.
The firm attracted billions in commitments to its energy-focused strategies despite an overall investor pullback in recent years from funds focused on investing in oil and gas.
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McDonald’s Sales Rise, Though Restaurant Traffic Remains Pressured
McDonald’s reported progress in boosting its U.S. business in the latest quarter, though an E. coli outbreak that sickened dozens presents a fresh challenge in getting people to make fast-food runs.
The world’s largest burger chain said Tuesday that its efforts to highlight value and core menu items buttressed its results for the three months ended Sept. 30. In the U.S., it eked out growth in same-store sales despite fewer guest visits.
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China’s Top Oil Companies Turn in Mixed Results Amid Weak Demand
Chinese state-controlled oil producer PetroChina posted lower profit and revenue in the third quarter, rounding out mixed results for China’s big three oil companies as they flagged slower demand and weaker crude prices in the world’s second-largest economy.
PetroChina, the listed arm of state-owned China National Petroleum Corp., said Tuesday that its net profit fell 5.3% from a year earlier to 43.91 billion yuan, equivalent to $6.16 billion. Revenue declined 12% to 702.41 billion yuan.
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OMV Misses Market Views as Weak Refining, Oil Trading Hit Results
OMV’s third-quarter earnings tumbled and missed expectations on lower refining margins and sales volumes from its oil-and-gas unit.
The Austrian energy company on Tuesday posted a quarterly net profit of 346 million euros ($374.1 million) on a current-cost-of-supplies basis, a figure similar to the net income that U.S. oil companies report. This was 20% lower than the 431 million euros it reported for the same quarter last year.
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Enterprise Products 3Q Net Rises on Higher Volumes
Enterprise Products Partners posted third-quarter earnings growth as higher commodity volumes ran through its natural-gas, refined-products and oil pipeline networks.
The Houston-based pipeline company posted net income of $1.43 billion, or 65 cents a unit, up from $1.35 billion, or 63 cents a unit, a year earlier.
MARKET TALKS:
Oil Price Reaction in Previous Session Might Be Too Bearish, Commerzbank Says — Market Talk
1207 GMT – Oil’s steep fall in the previous trading session might be premature as it still isn’t clear how Iran will react to Israel’s strikes over the weekend, according to Commerzbank Research. “Yesterday’s price reaction in the oil market may have been exaggerated,” commodity analyst Carsten Fritsch says in a note to clients. “It would be premature to completely rule out an escalation.” Prices fell to their lowest level since early October after Israel spared Iranian energy infrastructure, easing fears of supply disruptions in the region. Crude slightly recouped some losses in afternoon trade on Monday but still remains under significant pressure, with Brent crude and WTI up 1.1% and 1.3% at $71.77 and $68.24 a barrel, respectively. (giulia.petroni@wsj.com)
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Palm Oil Prices Rise Amid Bullish Sentiment, Strong Fundamentals — Market Talk
1003 GMT – Palm oil prices closed higher, following gains in energy prices and a rebound in soybean oil prices, said Anilkumar Bagani, commodity research head at Sunvin Group. Bullish sentiment also supported prices, thanks to supportive fundamentals of strong exports and a flat production outlook for October, said Sathia Varqa, senior analyst at Palm Oil Analytics. Production is expected to be unchanged, particularly from peninsular Malaysia, following cyclical low output, he added. The Bursa Malaysia Derivatives contract for January delivery closed MYR108 higher at MYR4,637 a ton. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
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Brent Options Volatility Skew Shows Market Relief After Israel’s Attack — Market Talk
0929 GMT – The oil market’s relief after Israel spared Iran’s oil infrastructure in its retaliatory attack is noticeable in the Brent options’ volatility skew, according to analysts. The skew provides insights into the market as it is used to estimate the likelihood of future price changes. Many market participants have been shielding themselves from potential price spikes through the options market due to high geopolitical uncertainty. Now, “this skew has narrowed significantly since the end of last week, highlighting the broader market view of reduced upside risk,” ING’s Warren Patterson and Ewa Manthey say in a note. Also, Goldman Sachs analysts say the sentiment change was visible in a sizable decrease in the Brent call options’ implied volatility skew compared with last week’s level, which was the highest in two-and-a-half years. (giulia.petroni@wsj.com)
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Gold Futures Rise to Near Record Levels Ahead of U.S. Elections — Market Talk
0858 GMT – Gold futures rise 0.3% to $2,763.30 a troy ounce. The precious metal is close to its all-time high of $2,772.60/oz, set on Wednesday. Gold is maintaining its strength despite rising U.S. Treasury yields and slightly easing geopolitical tensions, says Pepperstone research strategist Dilin Wu. The driving force appears to be bets on a potential Trump victory in the U.S. presidential election, Wu says in a note. This is coupled with growing concerns over the escalating U.S. debt crisis. While both candidates advocate for expansionary fiscal policies, a sweep for Trump could see U.S. debt skyrocket by $7.5 trillion over the next decade, Wu says. This is more than double the $3.5 trillion expected under a Harris administration. Given the “Trump trade,” the path of least resistance for gold seems to be upward, she adds. (joseph.hoppe@wsj.com)
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Oil Edges Higher After 6% Drop — Market Talk
0854 GMT – Oil prices are edging higher in early European trade after plunging 6% in the previous session on a lower geopolitical risk premium. Brent crude and WTI are up 0.8% at $71.58 and $67.95 a barrel, respectively. “The oil market sold off aggressively yesterday after Israel’s measured response [to Iran] over the weekend,” ING analysts say in a note. “While it is still not clear if and how Iran will retaliate, the market is clearly of the view that supply risks have eased for now.” Prices are finding some support in a U.S. plan to buy up to 3 million barrels of oil for the Strategic Petroleum Reserve. Still, investors’ focus appears to have shifted back to market fundamentals, with a weaker demand outlook and prospects of a supply surplus next year weighing on sentiment. (giulia.petroni@wsj.com)
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Copper Prices Flat, Investors Await Key Economic Data — Market Talk
0321 GMT – Copper prices are flat in early Asian trade after falling overnight. Copper prices will likely be volatile near term as investors await key economic data, Tongguan Jinyuan Futures say in a research note. The U.S. is due to release its 3Q advanced GDP growth estimate on Wednesday, which is expected around 3%. Expectations of a soft landing supported by strong consumption and a stable labor market could support copper prices, the analysts say. Investors will also be watching China’s October PMI data due later this week to gauge the impact of Beijing’s recent stimulus measures. The benchmark three-month LME contract is flat at $9,542.00 a ton.(sherry.qin@wsj.com)
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Iron Ore Steady; Markets Await China Policies — Market Talk
0234 GMT – Iron ore is steady in early Asian trade. Markets are likely digesting China’s main steel association’s comments that it would propose policies to reshape the industry amid weak demand, ANZ Research team writes in a note. Any consolidation of players in the industry will help stabilize the raw material markets, they write. Markets are now watching for new measures by China to address the industry’s concerns, and the sustainability of steel mills resuming production, Huatai Futures’ analysts say. The most-traded iron-ore contract on the Dalian Commodity Exchange is flat at CNY783.50 a ton. (kimberley.kao@wsj.com)
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Lithium Spodumene Prices Have Likely Bottomed — Market Talk
2341 GMT – It’s likely that lithium spodumene prices have bottomed and will remain stable at current levels until the end of this year, says Morgans. Existing supply appears able to meet demand in the short term. However, Morgans expects the balance to shift toward the end of the decade when demand outpaces the growth in supply. Also, higher lithium prices are necessary to encourage miners to go ahead with new projects. “So while prices may remain low in the near term, there is strong evidence for higher prices long term,” analyst Adrian Prendergast says. (david.winning@wsj.com; @dwinningWSJ)
Write to Barcelona Editors at barcelonaeditors@dowjones.com
(END) Dow Jones Newswires
10-29-24 0919ET