What to Watch

Exxon Abandons Russian Oil Projects Brokered by Rex Tillerson

In an extraordinary about face, Exxon Mobil Corp. says it is giving up on a joint Arctic project with Russia’s state-controlled energy giant, PAO Rosneft, that had been frozen by international sanctions on Moscow, write the WSJ’s Michael Amon and James Marson.

The firm said it decided last year to withdraw after the U.S. government imposed new sanctions on Moscow for its alleged interference in the 2016 presidential election. Those penalties came on top of U.S. and European sanctions on Russia over its actions in Ukraine.

The withdrawal for now marks the end of a signature achievement of Exxon’s former chief executive, Secretary of State Rex Tillerson, and firm’s hopes of drilling in Russia’s Arctic ocean oil fields, considered one of the world’s great unexplored oil-and-gas basins.

Exxon drilled one exploration well that it said produced promising results, but had to halt work because of sanctions. The company had hoped drilling could restart in the future, either with the blessing of the Trump administration or the eventual lifting of sanctions. Rosneft didn’t immediately respond to a request for comment.

Mr. Tillerson had clinched those deals in 2011 and 2012, arrangements that were overseen personally by President Vladimir Putin. Mr. Tillerson later received the Order of Friendship, the highest honor Russia can bestow on a foreigner.

Meanwhile, a buildup in U.S. oil inventories continued to weigh on oil prices on Thursday.

Brent crude, the global oil benchmark, fell 0.9% to $64.18 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.9% at $61.10 a barrel.

Energy News

How to Cover Up Alleged Fraud? Suppress Online Comments From Disgruntled Investors, SEC Says

Executives in AmeraTex Energy Inc. involved in an alleged oil and gas fraudraised about $12 million since 2013 by cold-calling investors, said the Securities and Exchange Commission in a lawsuit. To hide the complaints about the company, the SEC said the managers of AmeraTex paid service providers about $55,000 to make it harder to find comments from disgruntled investors when using search engines.

Trump Summons Steel, Aluminum Executives for Meeting on Trade Curbs

The Trump administration has summoned steel and aluminum executives for a White House meeting on Thursday about long-awaited curbs on steel and aluminum imports. Aluminum is often used as a conductor for the transmission of electricity. One target of any measures would be China, which U.S. officials blame for flooding the world with cheap steel and aluminum due to excess capacity in its industries.

If the U.S. imposed sanctions on China, the Asian economy might retaliate by targeting imports  of American soybeans, writes the WSJ’s Nathaniel Taplin. The country imported $12.4 billion of American soybeans last year to feed its pigs.

“As Saudi Arabia limits its crude oil exports to support prices, the higher prices have resulted in a surge of U.S. crude oil production which…leads to the U.S. taking a significant market share in China”

– Olivier Jakob, managing director of Petromatrix

Canadian Business Investment Expected to Slow in 2018, Survey Shows

Business investment in Canada is expected to cool significantly in 2018, reflecting a deep pullback in the country’s energy sector as heavy western Canadian crude fetches prices well below global benchmarks.

WSJ Energy In-Depth

Oilman T. Boone Pickens Is Becoming an ETF

  1. Boone Pickens was many things during his decades-long career: wildcatter, corporate raider, cattle trader and investor. Now, he’s become anexchange-traded fund, writes the WSJ’s Ryan Dezember.

The 89-year-old oilman recently hung it up at his hedge fund, but his investing philosophy– basically going all in on the U.S. energy renaissance–has been packaged for the passive-investing era.

The Pickens Oil Response ETF began trading on Wednesday with the ticker symbol will be BOON. It is tailored as a wager on U.S. energy abundance.

BOON is tracking the NYSE Pickens Oil Response Index, which was developed last year by some of Mr. Pickens’ lieutenants at his Dallas investment firm BP Capital.

Officials with New York Stock Exchange owner Intercontinental Exchange say that it is the first time NYSE has branded a stock index with an individual.

Big Number

439,000

Investors are watching U.S. oil imports from Venezuela after reports that Washington may impose sanctions on the country’s energy sector. This week’s American imports from Venezuela were 439,000 barrels per day. “The last time a full month’s imports were lower than this was February 1989,” said analysts for Standard Chartered in a recent report.

FutureCurve

Friday: Baker Hughes releases weekly data on the number of rigs drilling for oil in the U.S.

March 5-9: by IHS Markit 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.

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 Dan Molinski on U.S. crude stocks. Massive declines in crude oil stored in Cushing, Okla.–the U.S. hub and delivery point for futures contracts–is no longer propping up oil prices as investors see Cushing’s drop offset by increases elsewhere. The giant steel tanks dotting Cushing’s landscape now hold just 29 million barrels, the EIA said Wednesday, exactly half the 58 million they held three months ago, and just 37% of their 78 million-barrel working capacity. But while Cushing inventories have declined for 10 straight weeks, the Gulf Coast inventory has risen for six weeks amid rising U.S. exports and as Cushing pipeline takeaway-capacity increases. Inventories in transportation-challenged Canada are also up, keeping additional oil away from Cushing.

WSJ Reporter Robb Stewart on the effects of an earthquake on crude production. Monday’s big quake in Papua New Guinea has forced production to stop across Oil Search’s assets there for damage assessment, and UBS estimates that could last 6 weeks as it cuts 2018 EPS views 15% and production forecast by 10%. The company hasn’t provided guidance as of yet but formal updates are expected in the coming days. The investment bank’s prediction is based on the location and magnitude of the earthquake. Shares are down 3.9% today, helped along by fresh overnight declines in oil prices.