ENCAP AMASSES NEW $7 BILLION FUND TO INVEST IN OIL

EnCap Investments LP has raised $7 billion for one of the biggest energy-focused private-equity funds amassed this year, writes The Wall Street Journal’s Dawn Lim.

The Houston firm wrapped up its EnCap Energy Capital Fund XI LP at the end of November, surpassing its $6.5 billion goal.

EnCap will extend its investments in several regions including the Permian Basin and the Scoop and Stack of Oklahoma, mineral-rich regions believed to be more economical for drilling at today’s oil prices.

“More private-equity firms are raising funds focused on the energy space. Private-equity firms across the globe that closed energy funds last year raised north of $62 billion, and those that wrapped up funds this year collected another $52 billion, according to data-provider Preqin Ltd,” the Journal reports.

The move is taking place just as recent gains in energy prices have been stoking new optimism for an oil industry working through a fragile recovery.

MARKETS

Oil prices edged down on Tuesday as traders shifted their focus from OPEC’s output deal back to worrisome signs of an increase in U.S. output.

Brent crude, the global benchmark, was down 0.16%, at $62.35 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down nearly 0.40%, at $57.24 a barrel.

Prices started to lose traction Monday, with Brent falling more than 2%, just days after the Organization of the Petroleum Exporting Countries agreed with other major producers, including Russia, to extend a deal to curb crude production through 2018.

“An agreement was fully priced in,” said Ole Hansen, head of commodity strategy at Saxo Bank. Since OPEC and Russia confirmed Thursday they would continue to hold back crude output by nearly 2% through next year, the market has been “taking a breather” as it stabilizes, he said.

“Now the focus is shifting back to U.S. production,” Mr. Hansen said. Investors and analysts are looking ahead to weekly U.S. production data due Wednesday.

Previous numbers show U.S. crude production reached 9.48 million barrels a day in September, an increase of nearly 300,000 barrels over August, according to the U.S. Energy Information Administration.

That result points to robust growth in the coming months, suggesting output may still reach 10 million barrels a day before year-end, say analysts.

Investors are also watching an escalation of hostilities in the Middle East that could affect cooperation on OPEC’s supply cut between members Saudi Arabia and Iran.

Former Yemen President Ali Abdullah Saleh was killed Monday after the collapse of his alliance with the Houthi rebels controlling the capital, opening a new chapter in a conflagration that is part of the regional power struggle between Riyadh and Tehran who support different sides in the conflict.

ELECTRICITY PRICES PLUMMET AS GAS, WIND GAIN TRACTION AND DEMAND STALLS

Meanwhile, renewable power is continuing to change the U.S. energy landscape, write Erin Ailworth and Russell Gold.

The rapid rise of wind and natural gas as sources of electricity is roiling U.S. power markets, forcing more companies to close older generating plants.

Wholesale electricity prices are falling near historic lows in parts of the country with competitive power markets, as demand for electricity remains stagnant while newer, less-expensive generating facilities continue to come online.

“Citing low gas prices and the proliferation of renewables such as wind and solar, Vistra Energy Corp. a vestige of the former Energy Future Holdings Corp., said it would retire three coal-fired facilities in Texas by early next year,” the Journal reports.