The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.

0951 ET - U.S. natural gas futures are lower with the market awaiting the EIA's weekly inventory report due at 10:30 a.m. ET. The data is expected to show a larger-than-usual build extending the storage surplus over the five-year average. Although weather forecasts have turned a bit warmer, the surplus will keep pressure on prices, Dennis Kissler of BOK Financial says in a note. Some near-term positives remain, "with LNG demand at just over 18 Bcf a day and bargain hunting buyers believing upside value probabilities outweigh the downside at these price levels," he adds. Nymex natural gas is off 1% at $2.695/mmBtu. (anthony.harrup@wsj.com)

0917 ET - Crude oil futures are giving back some of the previous day's gains after the U.S. launched strikes against Iranian targets overnight. The pullback seems related to profit-taking after yesterday's big oil price rise, Ritterbusch & Associates says in a note. "Sustainability of this price downdraft is questionable given the continued strength in the WTI and Brent spread curves." The Brent front month could soften ahead of Friday's expiration more on positioning than any loosening in European crude supplies, the firm adds. WTI is down 0.4% at $84.13 a barrel and Brent is down 0.6% at $90.17.(anthony.harrup@wsj.com)

0840 ET - The Bank of England is likely to keep interest rates unchanged for a prolonged period provided energy markets remain contained, Charles Stanley Direct's Rob Morgan says in a note. "Rate cuts are impossible to justify so long as inflation risks loom large on the horizon, while quelling it with a rate rise would increase borrowing costs and make things even harder for large parts of the economy." Policymakers see encouraging signs inflationary pressures will moderate once the energy price shock passes. However, until policymakers are more confident that higher energy costs won't ignite wider price escalation or feed into wage demands, higher rates cannot be ruled out, he says. The BOE voted 6-3 to keep rates at 3.75% Thursday, with three policymakers favoring a rate hike. (renae.dyer@wsj.com)

0837 ET - The Bank of England voted to keep interest rates on hold at 3.75%, with six members voting in favor while three members voted to raise rates by 25 basis points. "Three members in favor of a hike indicates that policymakers remain cautious about the inflation outlook," Hargreaves Lansdown's Alice Haine says in a note. Escalating tensions in the Middle East have pushed up energy costs and raised the risk of high global inflation. The BOE said that there is little evidence so far to show second-round effects of inflation. However, the BOE noted that the risks to the inflation outlook are tilted to the upside relative to the central projection in the July Monetary Policy Report. (miriam.mukuru@wsj.com)

0834 ET - There remains a meaningful probability of a Bank of England interest-rate hike at either the September or November meeting, as policymakers continue to be concerned about volatility in the Middle East and the upside risks to energy prices, Raj Badiani, economics director at S&P Global Market Intelligence said. Yet the on-off ceasefire between the U.S. and Iran has helped dissipate some of the global energy-price shock arising from the conflict, despite uncertainty over any longer-term agreement, he says. "As a result, we expect a lower peak in U.K. headline inflation over the coming months, reducing pressure on the BOE to consider interest-rate increases in the near term," he says. (edward.frankl@wsj.com)

0830 ET - Although the Bank of England continued to signal the possibility of raising interest rates Thursday, this looks unlikely, Capital Economics economist Paul Dales says. The BOE expects inflation to reach a peak of 3.2% in the fourth quarter before falling below 2.0% at the start of 2028. Capital Economics expects inflation to peak at 3.5% but sees it falling quicker to 2.0% by the end of 2027. "That's why we don't think interest rates need to rise," Dales says. "In fact, if we're right, interest rates may be cut to 3.00% in 2027." The BOE voted 6-3 to leave rates at 3.75%. (renae.dyer@wsj.com)

0758 ET - Markets are expected to continue pricing in the possibility of the Bank of England interest rate rises later this year due to persistent inflation risk, Franklin Templeton Institute's Michael Browne says in a note. The BOE voted to keep rates on hold at 3.75% at Thursday's rate decision. High oil prices from the Middle East conflict add inflationary pressures as well as the impact of drought on food prices, Browne says. This factors are likely to cause investors to continue expecting rate rises from the BOE in 2026. Investors currently price in a total of 32 basis points of BOE rate rises in 2026, LSEG data show. (miriam.mukuru@wsj.com)

0745 ET - The Bank of England's decision to keep interest rates on hold is predictably pragmatic after both softer-than-expected inflation and renewed U.S.-Iran hostilities threatening a fresh wave of price rises, says ICAEW chief economist Suren Thiru. Given the tighter-than-anticipated 6-3 vote split, inflation worries currently outweigh concerns over the economy, keeping a September rate rise on the table, he says. Nevertheless, rates remain on a knife edge and policy could stay unchanged for the rest of the year, with rate-setters instead relying on tough talk rather than higher rates to contain inflation. "The longer the Iran conflict persists, the greater the risk that the committee's patience finally snaps," Thiru says. (edward.frankl@wsj.com)

0735 ET - Global air passenger demand fell 1.7% in June due mostly to the war in the Middle East as well as falling numbers in the U.S. and Asia-Pacific, the International Air Transport Association says. Passenger demand--measured in revenue passenger kilometers--was down 13.9% in the Middle East, while Asia-Pacific and North America were 2% and 1.1% lower, respectively. However, demand rose 3.8% in Africa and 1.5% in Latin America and the Caribbean. "While Middle East performance improved, renewed tensions will not help the region's recovery and the knock-on impact of rising fuel prices will continue to burden travelers with higher airfares," Director General Willie Walsh said. (ian.walker@wsj.com)

0735 ET - Sterling trims its gains after the Bank of England held interest rates at 3.75% as expected. The BOE voted 6-3 in favor of the decision with three policymakers preferring to raise rates by 25 basis points. However, BOE Governor Andrew Bailey said the process of underlying disinflation that was intact prior to the Middle East conflict remains in train. "That provides some tentative evidence that inherited inflation persistence may be weaker than had been presumed," he said. Sterling last trades at $1.3373, only marginally higher on the day, down from $1.3392 before the decision. The euro falls 0.1% to 0.8571 pounds, versus 0.8567 beforehand. (renae.dyer@wsj.com)

0732 ET - The Bank of England remains in wait-and-see mode given limited evidence of second-round inflation effects from the energy crisis, says George Brown at Schroders in a note. The BOE held interest rates at 3.75% on Thursday, as expected. "Despite the sharp rise in energy prices, the majority appear unconvinced this will translate into more persistent domestic inflation," he says. Wage pressures in the labor market appear weaker than expected in the face of the external energy shock, Brown notes. "That should limit the risk of second-round effects becoming embedded and, in our view, mean the bank can remain on hold for the foreseeable future," he says. (don.forbes@wsj.com)

0722 ET - Yields on U.K. government bonds, or gilts, turn lower after the Bank of England kept interest rates unchanged at 3.75% at Thursday's rate decision, as widely expected. Three out of nine policymakers preferred to raise rates. However, the BOE's statement said there was little sign of second-round effects from high energy prices so far and pointed to slowing wage growth and a weak labor market. Ten-year gilt yields drop to 5.005%, down 1.3 basis points on the day, after the rate decision, from 5.027% beforehand, Tradeweb data show.