This Week In Energy: The War For Market Share Is Only Just Beginning
This week saw yet more bad news for the oil sector, as the EIA’s latest figures released on Wednesday showed U.S. Inventories at levels not seen since 1982, when the agency first started collecting such data. To put it another way, the last time an ounce of gold bought you 29 barrels of oil was 1988. This resulted in a dip midweek before modest gains began to emerge yesterday off the back ofnews coming from Iraq of Islamic State militants launching an offensive on Kurdish forces near the oil-rich city of Kirkuk. Iraqi production rose by 200,000 barrels a day for a total monthly output of 3.9 million, according to a Bloomberg survey of industry experts, while total OPEC production rose by 483,000 barrels a day to 30.905 million barrels a day. Building on yesterday’s modest gains, we are seeing some highly promising signs after this morning’s trading, with oil prices currently up by over 7 percent at $47.97, but even so, it appears that the supply glut will continue as the battle for market share continues.
This war for market share may intensify further as yet more pressure mounts on the Obama administration to lift the U.S. crude export ban which has lasted for over 40 years. There are several fronts to the export battle, both external and internal. Latest poll data from Reuters suggests more Americans are now in favor of oil exports than ever before (though only by a small margin). In terms of public opinion, the overriding factor is concern over gasoline prices, which have halved in recent months thanks to the drop in crude oil prices. Former National Security Advisor to President Obama, Tom Donilon, says a complete lifting of the ban would be the “correct policy decision,” citing economic benefits, securing America’s energy future, foreign and energy policy goals as the benefits. Elsewhere experts maintain that easing the ban would have a positive impact for consumers in terms of gasoline prices as more crude oil on the international markets would maintain lower prices. However, not everyone would rejoice at the ban being lifted, first and foremost the U.S. refining industry, that has benefitted greatly from cheaper domestic crude oil supplies. Four refinery CEOs have already sent letters to the Senate Energy and Natural Resources Committee Chairwoman Lisa Murkowski to highlight the thousands of long-term, well-paid jobs that have been created by the U.S. shale boom replacing imports of foreign oil.
…click on the above link to read the rest of the article…
