What to Watch

Oil Edges Down Despite Weaker Dollar

Investors are bracing for bearish official U.S. oil production and inventory data due later Wednesday, following a slew of reports of rising U.S. shale output.

The expectations for surging U.S. production continued to weigh on oil prices on Wednesday, despite a weaker dollar.

The WSJ’s Spencer Jakab reports that U.S. energy companies may be donewith exercising financial discipline and aim to plow all their cash into pumping out an avalanche of oil.

Brent crude, the global benchmark, was down 0.32% at $62.52 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.63% at $58.84 a barrel.

Analysts said crude futures didn’t tumble further because of the weaker dollar. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.15% to 83.61 on Monday.

As oil is priced in dollars, it becomes less expensive for holders of other currencies as the greenback depreciates.

The gloom in the market persisted even after assurances from major producers that efforts by the Organization of the Petroleum Exporting Countries and its allies to eliminate about 2% global supply could bolster crude.

Saudi Arabia’s Oil Minister Khalid al-Falih said Wednesday he was confident about OPEC’s collaborative efforts, Reuters reports.

“I am confident that our high degree of cooperation and coordination will continue and bring the desired results,” Mr. Falih said at an industry conference in Riyadh.

Energy News

Trump Administration Plans to Undo Methane-Emission Rule

 The Trump administration is pushing to roll back an Obama-era climateregulation aimed at cutting emissions of methane from drilling operations on federal lands.

Asia’s Growing Appetite for Gas May Spur New LNG projects

Despite persistent reports of a global gas glut, soaring gas demand from China, India and Southeast Asia is absorbing the overflow, paving the way for new production from East Africa and elsewhere.

“The entire Asian LNG market will increase. It will stimulate more producers to take the risk to develop projects to get into Asia”

– Jarand Rystad, Chief Executive Officer of Rystad Energy

Russian Firm Is Close to Drilling Deal with Saudi Aramco

The Russian Direct Investment Fund on Wednesday said it is close to completing a deal with Saudi Arabia Oil Co., or Saudi Aramco, to invest in oilfield services firm Eurasia Drilling.

WSJ Energy In-Depth

Inside the Bribery Scandal Sweeping the Oil Industry

 The Wall Street Journal’s Sarah Kent and Eric Sylvers take readers behindthe scenes of one of the biggest bribery scandals the oil industry has ever encountered.

Italian prosecutors are pursuing a criminal trial against Royal Dutch Shell PLC and the chief executive of Italian oil company Eni SpA, alleging that the firms paid a bribe of around $1 billion to obtain a coveted oil block in Nigeria.

The move to prosecute the two companies revolves aroundthe firms’ 2011 deal to buy an Atlantic Ocean oil discovery believed to hold 9 billion barrels of crude.

Eni paid a sum of $1.1 billion to the Nigerian government for the block, but the money was later transferred to bank accounts belonging to a former Nigerian oil minister, Dan Etete.

Prosecutors are investigating 11 people including Eni’s current CEO, Claudio Descalzi and his predecessor Paolo Scaroni, while Shell is named as a corporation.

Italian prosecutors say that Messrs. Scaroni and Descalzi knew the money was destined to be paid as kickbacks to several people, including Mr. Etete.

Eni and Shell both deny wrongdoing, saying they simply paid the government and didn’t know the money would be used for bribes.

Big Number

2.04 million

The total west Canadian heavy crude production is expected to average 2.04 million barrels per day in 2017, said analysts for JP Morgan.

“Canadian crude is extremely important for the refineries in the Gulf Coast of the U.S. With declining supplies from Mexican and Venezuelan heavy crude and looming risks of further sanctions on Venezuelan oil, the need for Canadian crude will only increase further,” said the analysts in a recent report.

FutureCurve

Today: Three important oil-industry groups hold a symposium in Riyadh: The International Energy Forum, the International Energy Agency and the Organization of the Petroleum Exporting Countries. Saudi energy minister Khalid al-Falih, Russia’s energy minister Alexander Novak and OPEC’s secretary general Mohammad Sanusi Barkindo will speak.

Feb. 20-22: The Energy Institute hosts the International Petroleum Week conference in London. The speakers include BP Chief Executive Bob Dudley and Dr. Faith Birol, executive director of the International Energy Agency.

March 5-9: Cambridge Energy Research Associates hosts the CERAWeek energy conference in Houston. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco.

Reporter’s Notebook

WSJ Reporter Christopher Matthews on the industry’s response to the U.S. production surge. Schlumberger says concerns over U.S. frackers ramping up production are overblown. That’s because producers outside of the U.S. decreased their investment over the past three years so substantially that increased U.S. production will be needed to maintain the overall balance of the global oil market, according to Executive Vice President Patrick Schorn. North American producers will spend 15-20% more in 2018, but international producers decreased their investment by 2% in 2017 and are increasing their spend by 5% in 2018, he said.

WSJ Correspondent Bradley Olson on Saudi oil investments.Saudi Arabian Oil Co. is expected to invest about $80 billion on conventional oil projects in the next four years, according to an analysis by GlobalData, and about 60% of the country’s production will come from three fields in 2021. The average oil price at which these conventional developments break even is about $7.60 a barrel, according to GlobalData.