July crude oil futures rose last week on the news that the U.S. government was reassessing its crude-oil export ban in light of the advances in domestic oil production.
The nearby light, sweet crude futures contract was up as much as $2.67 a barrel at one point last week on the New York Mercantile Exchange, its highest level since April 22. Brent crude oil also traded higher.
The catalyst behind the rally was a decision by Secretary of Energy Ernest Moniz who announced on May 13 in Seoul that multiple U.S. agencies are re-evaluating the 1970’s policy which bans most crude-oil exports.
Recent advances in hydraulic fracturing and horizontal drilling techniques has allowed U.S. oil producers to access supplies previously confined in shale-oil fields. Booming U.S. oil production has driven supplies to near all-time highs, according to the U.S. Energy Information Administration which has been tracking weekly supply/demand data since 1982.
The surge in U.S. production has kept benchmark domestic prices well below international price levels which is the key factor supporting the desire to begin exporting more crude. With many market players anticipating the decision to export, crude oil prices have been adjusting upward despite the record supply levels.
Crude oil stocks remained near the 397.6 million barrel mark last week, but this didn’t stop the market from rallying, reflecting the strong bid from traders speculating on the change in the…