What to Watch

Crude Edges Down Ahead of U.S., OPEC Production Reports

Crude futures edged down slightly from multiyear highs on Wednesday ahead of the release of data on global crude production.

Brent crude, the global oil benchmark, fell 0.29% to $68.94 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.28% at $63.49 a barrel.

Oil prices have risen this year by over 3%, near highs last seen in 2014, on the back of geopolitical turmoil in key producing regions and efforts by the Organization of the Petroleum Exporting Countries and some producers outside the cartel to reduce output and rein in a global supply glut that has weighed on prices for over three years.

Energy News

Chevron Returns to Iraq

Chervon Corp. said Tuesday it plans to resume drilling operations  in Iraq’s semi-autonomous Kurdistan region, signaling an easing of tensions between the country’s central government in Baghdad and Kurdish officials, The Wall Street Journal’s Benoit Faucon reports.

Chevron had temporarily halted drilling in Kuridstan in October amid clashes between regional Kuridish forces and Iraqi government troops after the Kurds voted overwhelmingly for independence from Iraq in a referendum.

Jobs at U.S. Power Plants in Short Supply

Coal and nuclear power plant closings across the U.S. have led to a dearth of utility jobs, reports The Wall Street Journal’s Russell Gold.

The old power plants are being replaced by cleaner energy sources, including natural gas, wind and solar, which generally require fewer workers to operate.

When US traders went to bed after celebrating Martin Luther King Day they probably had a dream. This dream was to start taking profit on long positions and they turned it into reality.

Tamas Varga, analyst at brokerage PVM Oil Associates Ltd.

Norway Awards Oil Exploration Licenses

The Norwegian energy ministry said Tuesday it had awarded 75 offshore oil exploration licenses to companies including Statoil, Aker BP, Royal Dutch Shell PLC and Total SA.

“The number of licenses is the highest ever awarded in a licensing round on the Norwegian continental shelf,” Energy Minister Terje Soeviknes said in a statement.

WSJ Energy In-Depth

Five Potential Risks to the Oil Rally

Oil prices are trading near three-year highs, with Brent hovering close to $70 a barrel, but many analysts say the rally may have gone too far, too fast. Georgi Kantchev lays out the potential risks that could hinder crude’s ascent.

While geopolitical tensions in the Middle East—including U.S. threats to pull out of the 2015 international agreement to curb Iran’s nuclear program—have supported prices in recent months, some analysts think these tensions could subside and are unlikely to affect supply.

The flipside to rising prices is that higher oil prices could temper the strong demand growth that has helped rebalance the market.

More expensive oil could also undermine the resolve of the Organization of the Petroleum Exporting Countries and others including Russia to continue cutting crude output through the end of this year, as agreed. Some participants like Saudi Arabia are worried about losing global market share to U.S. shale producers.

To that end, U.S. shale producers have been ramping up production in response to higher crude prices, which could ultimately put a cap on prices.

Meanwhile, hedge funds and other speculative investors have amassed a record number of long positions on crude oil. A change in sentiment could encourage money managers to reverse their positions, weighing on prices.

Big Number

$333.5 Billion

Global investment in renewable energy and so-called energy-smart technology, including for efficiency, storage and electric vehicles rose 3% last year to $333.5 billion, according to data released by Bloomberg New Energy Finance.

FutureCurve

Today: The U.S. Energy Information Administration releases its weekly petroleum status report.

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

Monday: Chatham House in London holds its 2018 energy conference Jan. 29-30. Invited speakers include Claudio Descalzi, CEO of Italy’s Eni, Jabar Ali al-Luaibi the minister of oil for Iraq and Mustafa Sanalla, chairman of the National Oil Corporation of Libya.

Reporter’s Notebook

WSJ reporter Dan Molinski on the Venezuelan oil sector. Venezuela’s crude exports to the U.S. are expected to continue to fall as President Maduro tightens his grip on power, according to BMI Research. Crude exports destined for the U.S. dropped last year to a 26-year low of 593,000 barrels a day, compared with 741,000 barrels a day in 2016. The decline highlights the weak state of the country’s upstream oil business. “Years of underinvestment in the sector has deteriorated its infrastructure,” BMI said.

WSJ Latin America editor David Luhnow on the region’s oil industry. Latin America should be a bright spot for upstream oil activity in 2018, with major projects in Brazil, Mexico and Argentina underway, according to consultancy Wood Mackenzie. Ecuador could also be ripe for new oil exploration as the government shifts to adopt production-sharing contracts. But the consultancy did not mention Venezuela, which has become the “black hole” of Latin American oil.