What to Watch

Big Oil CEOs ‘Not Losing Any Sleep’ Over Peak Oil Demand

The heads of some of the world’s largest oil companies showed little concern  about future waning consumer appetite for crude due to the rise in renewables, write the WSJ’s Sarah Kent and Miguel Bustillo.

Amin Nasser, chief executive of Saudi Arabian Oil Co., known as Saudi Aramco, told the CERAWeek conference in Houston on Tuesday that such forecasts overstate the economic costs of shifting to greener sources of energy and underestimate the continued dominance of fossil fuels.

“I’m not losing any sleep over peak oil demand or stranded resources,” Mr. Nasser said. He warned instead that more investment is needed in the oil sector to ensure there is enough supply to meet future demand.

Still, other executives voiced concern that a recent plan by the Trump administration to slap U.S. tariffs on steel imports could hurt the oil industry due to the coming need for the metal to build new pipelines and other oil infrastructure.

“It will be impactful in a negative way to our returns,” Pioneer Natural Resources Chief Executive Tim Dove said at the CERAWeek conference. “We’re going to have to be watching this very closely.”

Energy News

Oil Falls on Growing U.S. Output Forecasts

Investor concerns about rising U.S. output dragged down oil prices  on Wednesday. Brent crude, the global oil benchmark, was down 0.62% at $65.38 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.67% at $62.18 a barrel.

Exxon Chief Woods Struggles to Undo Predecessors Botched Ventures

Chief Executive Darren Woods inherited a bunch of deals from his predecessor Rex Tillerson, now the U.S. secretary of state, which have since gone sour. This year Exxon took a write-off on over a billion dollars for walking away from some of Mr. Tillerson’s projects, including some in Russia and Mexico. The losses are putting a drag on the oil firm’s growth, analysts said.

“We cannot agree with peak demand very soon…I think oil will not only be growing, but continue to be number one”

– Mohammed Al-Sada, Energy Minister of Qatar

U.S. Shale and OPEC Chiefs Hashed Out Crude Differences at Dinner

OPEC Secretary General Mohammad Barkindo said he discussed competition in the oil market during a dinner with U.S. shale producers in Houston Monday night, reports the WSJ’s Christopher Matthews.

Mr. Barkindo said OPEC nations welcome competition from U.S. shale producers, who served as “midwife” to the technological revolution in drilling.

Still, he said conventional producers will, in many cases, offer the cheapest barrel of oil. “At the end of the day, the base load remains. Countries in OPEC sit on over 80% of the world’s proven oil reserves.” Other executives at the  dinner found the event tepid at best, Reuters reports. “The dinner was just generalisations and platitudes,” said Mark Papa, CEO of Centennial Resources Development Inc.

WSJ Energy In-Depth

Gary Cohn Resigns as White House Economic Adviser After Losing Tariff Fight

Gary Cohn is walking away from his role  as President Donald Trump’s top economic adviser because of the White House’s plan to implement steel and aluminum tariffs–a move Mr. Cohn opposed.

During his time at the White House, Mr. Cohn oversaw a major revamp of the U.S. tax code and pushed a significant rewrite of financial rules. But the former Goldman Sachs Group Inc. executive stumbled in an uphill and months-long fight to sway Mr. Trump against the tariffs.

Countries in the European Union that may be affected  by the U.S. trade barriers have vowed to retaliate, sparking the threat of a looming trade war.

Analysts say the tariffs could rile China, which has become the second-largest customer for oil exported from the U.S.

The Trump administration has also hinted at choking  off the Asian country’s investments in the U.S. and imposing duties on a range of its imports to punish Chinese firms for their alleged theft of intellectual property, Bloomberg reports.

Big Number

700 miles

The U.S. shale boom has created incentives to reverse the flow of crudeto facilitate exports through terminals in the Gulf of Mexico, the Financial Times reports. A planned oil conduit called the Epic pipeline will stretch 700 miles from the Permian Basin to Corpus Christi., said Phil Mezey, Epic’s chief executive.

FutureCurve

Today: IHS Markit hosts the CERAWeek energy conference in Houston, which concludes on Friday. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco. Also, the U.S. Energy Information Administration releases official weekly data on U.S. crude stocks.

June 5-6: The London Crude Oil Summit. The speakers include Shell Vice President of Crude Trading Mike Muller and Franco Magnani CEO, of Eni Trading and Shipping.

Reporter’s Notebook

The WSJ’s Bradley Olson on U.S. oil exports. Crude from the Permian basin in West Texas and New Mexico is likely to find its way to China through exports, according to executives in Houston speaking at the annual CERAWeek conference. The U.S. refining system will soon reach its limit of light, sweet crude that it can process economically, according to Daniel Jaeggi, co-founder and president of Mercuria Energy Trading SA. China is a natural destination for that crude because it has a lot of capacity for light, sweet oil, said Tim Dove, chief executive of Pioneer Natural Resources.

WSJ Correspondent Erin Ailworth on solar power. Sunrun says it maintained the top spot in the U.S. residential-solar market in the fourth quarter while generating some $43 million of positive cash flow, CEO Lynn Jurich told the WSJ. The company first became the market leader in third quarter, according to GTM Research, surpassing Tesla’s SolarCity. Nonetheless, Sunrun’s report has shares down 8.2% after-hours at $6.82. That would reverse much of the start-of-month bounce seen for the stock, which has gained 26% this year.