What to Watch

America Is Closer to Reaching Energy Independence

America is nearing its energy independence day, as it may soon both meet its domestic appetite for fuel and eclipse Russia as the world’s largest oil producer by 2023, writes the WSJ’s Sarah Kent.

Once heavily dependent on imports from the Middle East, the U.S. is getting closer to producing enough crude to satisfy domestic demand for refined products like gasoline, said the International Energy Agency, a Paris-based group which advises governments and corporations on industry trends.

Moreover, U.S. crude output is projected to reach a record of 12.1 million barrels a day in 2023, up about 2 million barrels a day from this year.

American oil output will surge past Russia’s, currently the world’s largest crude producer at about 11 million barrels a day, the IEA said in its closely watched five-year forecast.

Energy News

Oil Prices Rise on Libya Supply Issues

Supply disruptions in Libya’s oil sector have removed around 380,000 barrels a day from the market, which helped buoy prices on Monday. Brent crude, the global oil benchmark, was up 0.6% to $64.78 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.8% at $61.72 a barrel.

Crews Race to Restore Power on Atlantic Seaboard as Storm Eases

A storm that killed at least eight people  also caused power outages in much of the Northeast and Mid-Atlantic over the weekend. The tempest also left over half a million customers without electricity. Major utilities such as Eversource Energy are now scrambling to bring in out-of-state  workers to fix the damaged grid.

“Overall oil demand is set to be strong this year as long as the global growth story is intact and not destroyed by Donald’s trade war”

– Bjarne Schieldrop, chief commodities analyst at SEB Markets

Russia Moves to Scrap Accords to Send Gas to Ukraine

Russia is tearing up its contracts to supply Ukraine with natural gas, raising fears of new gas supply shortages across Europe during the winter. Kiev on Saturday warned that Moscow could use the massive amounts of gas it pipes through Ukraine to Europe as a political weapon. Tensions are high amid a conflict in eastern Ukraine between government forces and pro-Russian separatists that Kiev and the West say are controlled by Russia.

WSJ Energy In-Depth

Trump Administration Beats Back Warnings on Tariffs

Trump administration officials are pushing back against  criticism that the White House’s planned steel and aluminum tariffs could hurt a strengthening American economy.

Manufacturing executives who use the metals to make beer cans, cars, refrigerators and other goods warn of price surges, shortages and retaliatory trade barriers on U.S. exports if the administration follows through on the plan, announced Thursday, to impose 25% tariffs on imported steel and 10% duties on aluminum imports.

Aluminum is also often used as a conductor for the transmission of electricity.

Executives complain that a lack of detail about Mr. Trump’s plan has injected unknowns into their planning.

“It’s the uncertainty that has many people concerned,” said John Hayes, chief executive of Ball Corp., a major producer of beverage cans and metal food packaging with about 9,000 U.S. workers.

Following the tariff announcement, Swedish home-appliance maker Electrolux AB said it was putting on hold a planned $250 million investment to expand a plant in Springfield, Tenn., until it hears more details about the tariffs.

The administration’s officials took to the airwaves Sunday to play down concerns. They said the U.S. would apply steel and aluminum barriers expansively, leaving no country exempt.

“The notion that it would destroy a lot of jobs, raise prices, disrupt things, is wrong,” Commerce Secretary Wilbur Ross said on ABC. He said the tariffs would be valued at $9 billion, a fraction of overall U.S. economic output, which is $19 trillion a year.

The administration is expected to release details of the plan this week, or the following one.

Big Number

2020

The oil industry may need to cough up additional investment funds to create supply growth  after 2020, said the International Energy Agency in its latest oil market report.

FutureCurve

Today: IHS Markit hosts the CERAWeek energy conference in Houston which concludes on Friday. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco.

Tuesday: API issues forecasts on the U.S. crude inventory.

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 Alison Sider on U.S. gas shipments. The first vessel loaded with liquefied natural gas sailed from Dominion Energy’s Cove Point terminal in Maryland, the company said Friday. The $4 billion facility has been under construction for more than four years. U.S. exports of super-chilled natural gas have been ramping up, and Cove Point joins Cheniere Energy Inc.’s LNG export facility on the Gulf Coast, which began LNG exports in 2016. Shell is taking the initial cargoes.

The WSJ’s Reporter Dan Molinski on U.S. fuel imports. Jet fuel imports to the U.S. West Coast continue to rise even as the Trump administration keeps calling for American energy independence. A new EIA report says the West Coast now imports about 94,000 barrels per day of the 500,000-plus of jet fuel it consumes, while during the years 2012-2014 virtually all of its demand (98%) was met by local production. Almost all West Coast jet fuel imports are coming from three countries–South Korea, China and Japan. The EIA attributes rising jet fuel imports to the West Coast’s relative isolation from areas of production, and growing demand due to low fuel prices, a growing population and a better economy.