What to Watch

Oil Demand Set to Rebalance Surge in U.S. Shale

Consumer appetite for crude will grow faster than expected and help offset surging U.S. shale oil output, writes The Wall Street Journal’s Christopher Alessi.

The International Energy Agency said that the world’s appetite for crude will increase by 1.5 million barrels a day to reach 99.3 million barrels a day in 2018, an upward revision of 90,000 barrels from its forecast a month before.

The market has been given respite from concerns about a supply glut by an expected demand increase in industrialized nations, including Europe, the U.S. and Japan, the agency said on Thursday.

“The market rebalancing is clearly moving ahead with…supply and demand becoming more closely aligned,” the report noted.

The IEA, a Paris-based organization that advises governments and corporations on energy trends, struck a more optimistic tone than last month, when it warned that U.S. shale production could overwhelm global demand and undermine the oil market’s fragile recovery.

Meanwhile, oil prices wavered between gains and losses Thursday morning, as investors weighed signs of growing global oil demand and surging U.S.shale production.

Brent crude, the global benchmark, was up 0.34% at $65.11 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.48% at $61.27 a barrel.

Energy News

Saudi Arabia Signals Commitment to Oil-Production Cuts

Saudi Arabia said it would continue limiting  its crude-oil output, signaling the world’s top oil exporter remained committed to production caps. The country’s national oil company said its crude output would remain below 10 million barrels a day and its exports below 7 million barrels a day. The pledge on Wednesday came as differences have surfaced between Saudi Arabia and Iran on the ideal oil price. Iran is pushing for prices at $60 a barrel so as not to stimulate U.S. shale output, while Saudi Arabia is advocating for $70 a barrel.

Top Chinese Oilman Falls Out of Favor with Beijing

The Chinese chief executive of CEFC China Energy Co has fallen out favorwith Beijing as U.S. investigators have charged associates of the oil firm with engaging in bribery to secure major energy contracts and advance China’s economic and strategic interests in Africa. Mr. Ye Jianming shot from obscurity to spearhead multibillion-dollar deals with leaders in Africa, Europe and Russia. Now amid increased scrutiny in the U.S. and Beijing, CEFC’s biggest play yet—a $9 billion deal for shares in PAO Rosneft to become the third-largest shareholder in Russia’s state-run producer—is being delayed.

“We see a limited downside to crude prices as we move past what we see as the longest period in crude balances this year.”

Analysts for JBC Energy Reports

U.S. Allies Eye Tough-on-China Approach to Avoid Trump Tariffs

U.S. allies such as the European Union are seeking exemptions from President Donald Trump’s steel and aluminum tariffs. Several countries have signaled a willingness to join forces with the U.S. in addressing a metal glut emanating from China. The Trump administration’s steel tariffs have sparked concerns of a global trade war which could impact U.S. oil exports, analysts say.

WSJ Energy In-Dept

Glencore’s Cobalt Sale Helps China’s Drive to Build Electric Vehicles

Glencore PLC agreed to sell a chunk of its cobalt production to a Chinese company, reports the WSJ’s Scott Patterson.

The move marks another victory for China in a race to lock up supplies of an important metal used in batteries for electric vehicles.

Glencore, the giant Swiss commodity producer and trader, signed a deal several weeks ago to provide more than 50,000 metric tons of cobalt over three years to GEM Co., a Shenzhen-listed chemicals firm, the person said.

Glencore is the world’s biggest cobalt producer, and the amount represents about a third of its production over the course of the deal.

Once an obscure metal in a relatively small market, cobalt is now projected to be in greater demand as electric-car production increases and smartphone use grows around the world.

The scarce blue metal is an essential ingredient in lithium-ion batteries because of its ability to absorb high levels of heat.

Apple Inc., Tesla Inc., Volkswagen AG and other large companies have been scrambling to secure their own cobalt supplies.

Big Number

99 Billion

Analysts expect government data scheduled for release Thursday to show natural-gas stockpiles shrank slightly more than usual for this time of year, writes Alison Sider for Dow Jones Newswires.

The U.S. Energy Information Administration is expected to report that storage levels fell by 99.09 billion cubic feet of gas during the week ended March 9, according to the average forecast of 11 analysts, brokers and traders surveyed by The Wall Street Journal.

FutureCurve

Today: The International Energy Agency issues an oil market report

April 18–19: IQPC hosts the Oil & Fuel Theft Summit in Geneva. Speakers include Mahmoud Al-Bayati, the director general for counter-terrorism for Iraq, William J. Waggoner, the Chief Executive Officer for the Mexico Petroleum Company and Daniel Gianfalla, a member of the national maritime security advisory committee at the U.S. Department of Homeland Security.

Reporter’s Notebook

The WSJ’s Christopher Matthews on pipeline firms and taxes. The Federal Energy Regulatory Commission will tackle tax issues at its monthly meeting Thursday, as utilities and pipeline companies wait to hear whether they will be forced to reduce rates as result of the corporate tax cut. FERC’s top agenda items for electric companies and natural gas pipelines are the impact of the tax overhaul. Clearview Energy Partners thinks FERC will take a mixed approach that could result in reductions in electric and natural gas rates in the near-term to account for the tax rate decline in 2018, but may need more time to address deferred tax balances.

The WSJ’s Erin Ailworth on challenges facing utilities. Electric utilities concerned about the “unsustainable liabilities” they face in California likely won’t see a fix in this legislative session, according to analysts at Height Securities LLC who called addressing the liability issue an “uphill battle.” The industry’s concerns about liabilities have gotten increased attention since October, when deadly wildfires swept through parts of Northern California. Investigators haven’t yet determined causes for those fires, but utility PG&E has faced public scrutiny over whether its infrastructure could be at fault. California Governor Jerry Brown said his administration would work with state leaders to update relevant liability rules and regulations “in light of changing climate and the increased severity and frequency of weather events.