What to Watch

OPEC May Soon Become ROPEC

 The Organization of the Petroleum Exporting Countries hopes to finalize the framework of a long-term partnership with non-OPEC producers such as Russia by year-end, the group’s president said Tuesday.

Suhail al-Mazrouei, the energy minister of the United Arab Emirates and temporary OPEC president, made the announcement at International Petroleum Week, an oil and gas conference in London happening over the next three days. He was among a host of speakers Tuesday morning including BP PLC Chief Executive Bob Dudley.

Mr. al-Mazrouei’s announcement confirmed speculation in recent days that OPEC and Russia are looking to solidify their energy alliance.The 14-member-strong OPEC and 10 producers outside the group agreed over a year ago to production cuts of a combined 1.8 million barrels a day, but there have been doubts Russia, the world’s largest oil producer, will continue the effort in the long run.

Mr. al-Mazrouei said a framework establishing long-term cooperation is in “draft form.” He said Russia was an essential part of the group and that the agreement had been successful.

Meanwhile, BP’s Mr. Dudley said the oil sector has moved to a “more normal, though still cyclical, oil range,” following a “very painful restructuring” after the price crash in 2014. “We had all begun to think that $100 oil was normal,” he said of the pre-crash era.

Oil prices were mixed Tuesday, as lower-than-expected inventories buoyed the U.S. crude grade while refinery maintenance in Europe weighed on oil prices in the region.

Brent crude, the global benchmark, fell 0.7% to $65.24 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.8% at $62.19 a barrel.

Energy News

Is the U.S. Losing Its Crude Pricing Edge?

 The difference between U.S. and global oil prices is the smallest since before Hurricane Harvey hit the Gulf Coast, raising questions about how much crude will continue to gush from the Gulf Coast to global markets, reports the WSJ’s Alison Sider.

EU Opens Investigation of Linde-Praxair Merger

 European Union authorities opened an antitrust investigation into plans by industrial-gas giants Praxair Inc. and Germany’s Linde AG to join forces to create the market’s biggest operator. Regulators are concerned the deal could harm competition for gases such as helium that are used for among other matters to reduce emissions from refineries.

“[Refined] product exports from China and Saudi have hit record highs, which raises concerns as to whether product demand in Asia is becoming saturated”

– Analysts for RBC Capital Markets

World’s Biggest Miners Emerge From Their Hole in a $200 Billion Comeback

 The world’s biggest mining companies such as Glencore PLC, Anglo American and BHP Billiton Ltd. are expected to report an increase in profits this week as the industry makes a comeback, partly buoyed by the global economy’s renewed appetite for raw materials and a burgeoning electric-vehicle market.

WSJ Energy In-Depth

Hey Big Spender: Oil Producers Buy Back Shares After Years of Selling

 North American energy producers sold off $60 billion in new stocks back when oil prices were in the doldrums. But now firms such as Pioneer Natural Resources and Anadarko Petroleum Corp. are spending big on share buybacks, just as crude makes a comeback.

Moves to repurchase shares in the market pump up the value of a firm’s remaining stocks.

The buybacks mark a reversal from the past three years when energy producers pumped new shares into the market to raise cash so they could pay down debt and keep rigs drilling.

Big Number

50%

Investors are scratching their heads trying to follow the gyrations of the U.S. oil market. Although there had been concerns about a surplus in oil inventories at Cushing, Oklahoma, the stocks have fallen by nearly 50% to 32.7 million barrels, analysts said.

“It would be hard to describe the recent dynamics of the U.S. oil market as normal; sharp falls in inventories in some key areas, increases in others, strong production gains but continued market tightening,” said analysts for Standard Chartered in recent report.

FutureCurve

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.

June 5-6: The London Crude Oil Summit. 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 Christopher Alessi on BP. “The cost of renewable energy is plummeting, consumer demand is rising and governments are taking action,” BP Chief Executive Bob Dudley said at the start of the International Petroleum Week in London on Tuesday morning. “That means more affordable energy for millions of people,” Mr. Dudley added. But he cautioned that the transition to a lower carbon energy mix would not be an “overnight switchover.” Broadly, the world is on course to have the “most diversified fuel mix ever,” Mr. Dudley said, with non-fossil fuels estimated to grow to ¼ of the world’s energy portfolio, according to a scenario BP is set to present later Tuesday as part of its annual Energy Outlook.

The WSJ’s Reporter Benoit Faucon on tensions in the Middle East. Chevron Corp. said Monday it has resumed drilling in Iraqi Kurdistan, a sign that tensions between Baghdad and the semiautonomous area’s government are easing. “We have restarted drilling operations at our Sarta 3 field,” a spokeswoman for the U.S. major told the Wall Street Journal. Chevron suspended drilling in Iraqi Kurdistan in October after Iraqi forces moved into Kirkuk, routing Kurdish forces who had effectively annexed the city and its oil fields, which lie outside the region’s formal boundaries. The move by the Iraqi government came after the Kurds held a referendum on independence from Baghdad, including Kirkuk and other disputed territories they seized during the war against Islamic State.

The WSJ’s Reporter Bradley Olson on shale output. The productivity of shale wells has continued to outperform expectations in major U.S. basins, although the rate of growth appears to be slowing, according to Goldman Sachs. Most of the improvements have been driven by longer wells and drilling in “sweet spots,” according to Goldman’s analysis. That’s an indication that potential future productivity gains are far from certain, since sweet spots could eventually run out