What to Watch

Bullish Production Forecast Weighs on Crude

Oil futures were depressed on Monday as investors considered whether the market will again suffer as surging U.S. crude output drowns out any attempt to rebalance supply and demand.

Brent crude, the global benchmark, was down 0.13% at $68.52 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.09% at $63.26 a barrel

Oil prices had closed down Friday after the International Energy Agency released its monthly oil market report, predicting U.S. crude production would climb above 10 million barrels a day this year, surpassing output from Saudi Arabia and rivaling that of Russia—the world’s two largest crude producers.

Meanwhile, Saudi Arabia’s energy minister said Sunday that OPEC and other big-oil producing allies like Russia should find ways to cooperate beyond their petroleum-production limits this year.

Energy News

Philadelphia Energy Solutions to File for Bankruptcy

The owner of the largest U.S. East Coast oil refining complex Philadelphia Energy Solutions LLC announced to its employees on Sunday that it plans to file for Chapter 11 bankruptcy, according to Reuters.

Iraq, U.S. Firm Sign Deal to Process Gas from Giant Oilfield

Iraq agreed to a deal with U.S. energy company Orion on Monday to process natural gas extracted at its giant Nahr Bin Omar oilfield.

“We should not limit our efforts to 2018. We need to be talking about a longer framework for our cooperation”

Khalid al-Falih, the Energy Minister for Saudi Arabia

Chinese Conglomerate Interested in Buying Noble Group

Cedar Holdings Group has expressed interest in buying control of the embattled commodities firm Noble Group.

WSJ Energy In-Depth

Frackers Could Make More Money Than Ever in 2018, If They Don’t Blow It

U.S. shale companies are poised to earn real money this year for the first time during the fracking boom, reports the WSJ’s Bradley Olson.

Crude prices have surged almost 40% in the past six months. Yet shale producers are so far touting cautious spending plans for 2018—in contrast with past price spikes, when companies mounted aggressive drilling campaigns that quickly increased supplies and pushed prices back down.

While the companies have posted profits in the past, they have never done so while limiting spending to the amount of cash they generate from operations.

Companies such as Anadarko Petroleum Corp. already have detailed plans to reduce 2018 spending on drilling and operating wells. Even oil giant Chevron Corp. plans to cut such investments by almost 10%.

Big Number

4 million tons

China is pulling in ships from all over to avoid a natural gas supply squeeze ahead of a cold snap. Some 60 ships carrying more than 4 million tons of LNG are on their way to China this month, Reuters reports.

FutureCurve

Tuesday: The American Petroleum Institute releases its forecast of U.S. crude inventories.

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

Jan. 29-30: London-based Chatham House holds its 2018 energy conference. 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 Erin Ailworth on the Trump administration’s pending decision on solar panels. The deadline for President Trump to decide whether to impose tariffs on solar imports is a week away, and people on both sides have been jockeying in recent days to sway him. The CEOs of Suniva and SolarWorld Americas, the embattled solar manufacturers who requested trade protections, lauded Mr. Trump’s attention to the issue and said he “can save and rebuild this great American industry and create thousands of jobs by immediately imposing 50% tariffs.” Meanwhile, the head of the Solar Energy Industries Association, which represents solar installers and others, wrote the president to argue high tariffs “will lead to the layoff of tens of thousands of workers … and bring [an] American economic engine to a screeching halt.”

WSJ correspondent Benoit Faucon on security concerns in Libya’s oil region. Libya’s National Oil Co. says oil production has restarted producing at the 50,000-barrels-a-day level at the Al-Salah oil fields in the East of the country after a blockade of over two months. The resumption is the latest sign of oil recovery for the war-torn nation, where production has tripled in a year and a half to one million barrels a day. Pumping had been blocked since early November at a cost of $281 million for the Libyan economy, NOC said. The state-run company said the unauthorized shut-down has been carried out by Wintershall. But a spokesman for the German oil company says the local community of Jakhira had demanded that Wintershall shut in production at the fields. Wintershall turned off the spigots to ensure the security of its employees and security, he said.