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This Week in Energy: Jumping the Gun on US Crude Exports to Europe

Before we get started on this weeks letter – we ask you to take a look at our revamped presentation which looks at 5 trends set to change the oil and gas industry over the next 10 years. You can read the report here.

With the debate over whether to lift the 40-year-old ban on US crude exports gaining momentum, news that the US government has approved the first licenses in years to re-export crude to Europe has caused a flurry of speculation that this might be the next step towards easing the crude export ban. Before we jump the gun, however, this was the big news this week:

According to an exclusive report from Reuters based on information obtained from a Freedom of Information Act request, the Department of Commerce has granted two licenses to export crude to the UK since last year and two licenses to import crude to Italy, while a fifth license for crude exports to Germany was applied for last month.

These licenses are reviewed and approved by the Bureau of Industry and Security (BIS), which reportedly has approved 120 licenses since January 2013, most of them for exports to Canada. What are they worth? UK exports under these two licenses have been worth about $1.8 billion, while exports to Italy have been worth about $3.12 billion. If the Germany license is approved, that will add another $2.6 billion in otherwise banned exports to the list.

But what we’re really looking at is foreign crude that is being re-exported from the US to Europe—not exports of US crude. This is a point the government was quick to clarify, in another Reuters report.  

What Reuters is now suggesting is that these new crude re-export licenses may “add to the expectations that the Obama administration will allow companies to use provisions in the existing regulation to slowly increase exports, while stalling on a decision on whether to scrap the ban”.

Perhaps, if US natural gas exports to non-FTA countries are anything to go by.

Natural gas exports, too, remain in question. Republican leaders on the House Energy and Commerce Committee are urging the administration to hasten the pace at which it approves natural gas exports.  So far, the US Department of Energy has approved five applications to export natural gas to non-FTA countries in the past two years. Over 20 applications are said to remain in process.

We sent out a brief mail yesterday letting readers know about today’s premium letter which is a must read. In it Legendary energy trader Dan Dicker looks at the recent rout in large caps and why he believes dividend plays are the way forward. He recommends a number of stocks that are set to provide great returns to investors.

Dave Forest looks at a number of small cap stocks that all have potentially huge upsides and a lot of newsflow coming out in the next few months.

The Executive Report looks at the developing situation in Iraq and he we believe things will play out over the short term.

To read this weeks premium letter for free click here.
That’s it from us this week.

James Stafford
Oilprice.com, Editor




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