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Summary

  • It would indeed be good news if US producers, particularly those in the Eagle Ford Shale, were permitted to export their super light crude grades into global markets.
  • However, there is no fresh momentum towards a wholesale easing of the US crude export ban in 2014.
  • If anything, we have seen a slowdown of the approval process at the Department of Commerce and quick push back on Capitol Hill.

[Originally published on 7/31/2014]

Today's WSJ article "US Exports Ready to Sail" once again rekindled speculation about the prospects of an easing of the US's 40 year old ban of crude exports. It would indeed be good news if US producers, particularly those in the Eagle Ford Basin sitting on a glut of increasingly unmarketable light sweet crude and condensates, would be permitted to export those barrels into global markets or at the very least exchange these light crudes for heavier imported grades more suited to US Gulf Coast refining configurations. Deeply discounted condensates are a great place to start shipments abroad. Nonetheless, any such movement seems to be little more than wishful thinking, at least for the balance of 2014.

In a Mobius Risk Group market commentary from 26 June titled Exports: New News is No News we highlighted the misinterpretation being made in the media and the marketplace about the significance of approvals granted by the Department of Commerce to Enterprise Products Partners (NYSE:EPD) and Pioneer Natural Resources (NYSE:PXD) to export cargos of condensates stabilized via field distillation columns.

We would stress that there is no new momentum towards a wholesale easing of the export ban. If anything, we have seen a slowdown of the approval process at Department of Commerce and push back on Capitol Hill. The concern in Congress is that lifting the ban and allowing increased exports of US crude supplies would raise gasoline prices in a politically close mid-term election year. So while we may see some token approvals of requests to permit the export of field stabilized condensates, any broad shift in the export ban before the November election just is not going to happen.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Source: US Crude Export Ban Sticks Through Election Year