The Ukraine risk premium is back a bit as oil struggles to decide how dangerous the situation is. The lack of inflation in China is giving oil a boost as it could open the door for more stimuli in a country where they have been actively refilling their strategic reserve. Yet the biggest news on oil may be the fact that the Obama administration is considering lifting the ban on U.S. crude oil (NYMEX:CLM14) exports.
The boom in shale oil has been a blessing yet has raised some real questions of how best to take advantage of some of the highest quality crude oil on the planet. The White house’s John Podesta was taking an active look at the strains caused by the growing production of this crude and wonders if exporting it might be in the United Sates best interest. Already the US is moving quickly to approve the reporting of Canadian Crude from the Gulf Coast of the United States.
Reuters reported that the U.S. Department of Commerce approved five crude oil re-export licenses in April so we could ship oil to places like China, India, Korea and Malaysia. While this is a positive it does raise the question why we are using U.S. ports to export Canadian crude, then why we are not going to alleviate what could become a major supply glut by sending the oil to or trading partners.
Yet others wonder why we are not building more facilities to process our own high yielding crude. Refiners in the United States would want to expand or really retool to create more products for export and not export our precious crude.
Natural gas (NYMEX:HPM14) pulled back after the weekly supply injection shook out some weak longs. The first injection that beat expectations and came close to the five averages raised some hopes that producers were beginning to respond to the call to refill storage. Yet for a market that is going to consistently inject 30% more than the five year average every week between now and November is going to have to do a lot better if we are going to get back to adequate storage.