- POSTED: 26 Jun 2014 05:03
New York oil prices were lifted by a report suggesting the US is easing a ban on crude exports even as inventory data suggested mixed energy demand in America.
NEW YORK: New York oil prices were lifted on Wednesday by a report suggesting the US is easing a ban on crude exports even as inventory data suggested mixed energy demand in America.
US benchmark West Texas Intermediate for August delivery rose 47 cents to $106.50 a barrel on the New York Mercantile Exchange.
European benchmark Brent oil for August delivery dropped 46 cents to $114 a barrel in London.
A report late Tuesday in the Wall Street Journal said the US Commerce Department approved the first exports of unrefined oil in nearly four decades, potentially clearing the way for a bigger policy change that could tighten the US crude market.
The Journal said the department green-lighted a type of ultra-light, minimally processed oil known as condensate to foreign buyers.
A Department of Energy spokesman said the agency had implemented "no change" in its policy on crude exports. However, the agency "no longer" defined oil that had passed through a distillation tower as crude for regulatory purposes.
The US has barred crude exports since the oil shocks of the 1970s, while generally allowing exports of refined products.
Carl Larry, an analyst at Oil Outlooks & Opinions, said the government's ruling places many types of oil produced in the recent shale boom in a "grey zone" that could allow more exports if they are classified as a petroleum products rather than crude oil.
"The argument now is what is crude?" Larry said.
Oil producers have been pressing to end the ban on crude exports. The US action on condensate is "a step forward by the US administration that they start to recognise this issue of crude export," Larry said.
But some analysts expressed scepticism that US policy enacted after the oil shocks of the 1970s would change quickly.
Kyle Cooper, managing partner at IAF Advisors in Houston, Texas, said the type of oil that has been cleared for export is very different from benchmark crudes.
"It's not a blanket exemption" to the US crude export ban, Cooper said. "This is not exporting WTI."
Meanwhile, the US Energy Information Administration reported that US crude inventories rose by 1.7 million barrels in the week ending June 20 compared with analyst expectations for a 1.2 million barrel decline.
However, Cooper saw some elements in the inventory report that suggested a tighter crude market.
For example, refinery utilization rose by 1.4 per cent to 88.5 per cent, indicating plants are boosting output in anticipation of a heavy driving season around the July 4 Independence Day holiday in the US.
"There's going to be more crude demand for the next few weeks," he said.