What to Watch

Saudi Aramco, Google in Talks over Creating Tech Hub

 Saudi Arabia’s state-owned oil company, known as Aramco, and Google parent Alphabet Inc. are in discussions about building a large technology hub inside the Middle East nation, report The Wall Street Journal’s Maureen Farrell, Benoit Faucon and Summer Said.

The potential joint venture, about which executives have been in talks for months, could see Alphabet help Aramco to develop data centers around Saudi Arabia, according to people familiar with the matter.

The talks come as Crown Prince Mohammed bin Salman has been leading the kingdom’s efforts to take Aramco public, potentially this year.

“An alliance would help bolster the development of the technology sector in Saudi Arabia, a goal Prince Mohammed has pointed to as a key part of his plan to wean the kingdom off its reliance on oil,” the reporters note.

Energy News

Oil Prices Mixed

 Oil traders weighed fresh signs of burgeoning U.S. shale output against strong compliance with OPEC’s efforts to rein in supply, as crude prices stagnated Friday morning.

Brent crude, the global benchmark, was down 0.10% at $69.58 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.06%, at $65.84 a barrel.

Texas Shale Challenges Brent as Global Benchmark

 Trading volumes of West Texas Intermediate futures, a measure of U.S. crude oil prices, have surpassed volumes of Brent crude—the current global benchmark—by the largest margin in at least seven years, Reuters reports.

Robust shale production and the lifting of a ban on U.S. crude exports two years ago has helped WTI to rival Brent as the international standard.

“The rebalancing of the oil market has likely been achieved, six months sooner than we had expected.”

Goldman Sachs analysts

Big Banks Embrace Bullish Oil Outlook

 Big banks, including Goldman Sachs, Morgan Stanley and JPMorgan Chase, have shifted to more bullish stances on the global oil market in the past couple of weeks, in a sign that Wall Street thinks OPEC’s production cuts are at last draining the global supply glut, Bloomberg reports.

Big Number

$546 Million

Electric vehicle maker Tesla Inc. on Thursday raised $546 millionin its first asset-backed securities deal.

FutureCurve

Today: Baker Hughes releases weekly data on the number of active oil rigs in the U.S.

Tuesday: The American Petroleum Institute releases its weekly forecasts on U.S. petroleum inventories for the week prior.

Wednesday: The U.S. Energy Information Administration releases official weekly data on U.S. oil stocks and production.

Reporter’s Notebook

WSJ Reporter Erin Ailworth on utilities. Duke Energy isn’t sure just how much tax reform will save its North Carolina customers on their bills, but the utility says they will benefit. On Thursday the company suggested a few ways it could pass along the tax savings, including by using them to offset a rate request pending before regulators. Duke said it could also use the savings to pay for storm-related or environmental compliance costs that would otherwise be billed to customers. “With a balanced approach, our customers can benefit from a reduction in the corporate income tax rate,” said David Fountain, president of Duke Energy North Carolina.

WSJ reporter Dan Molinski on the natural gas market. BTU Analytics says another round of cold air could again cause natural gas prices to rise as heaters get cranked up and storage levels fall. “Where the polar vortex hits hardest this month is important,” it says. The South Central region storage levels saw large drawdowns in January and the majority of incremental U.S. supply is expected to originate from the Permian and the Northeast, which may be pipeline constrained and unable to efficiently refill storage in the south, it says. “Further draws in the South Central area could set up very strong Henry Hub pricing… however, the worst of the vortex is currently expected around the Midwest and East regions.”