Lifting export ban pushes Brent-WTI spread to below $1/barrel

Last Friday, US Congress passed laws to avert government from shutting down and several other measures, one of which includes lifting a 40 year old ban on crude oil export. During the crude oil embargo era, back in 70s, crude oil export was banned, however overwhelming rise in oil production due to fracking finally led to the lifting of the ban.

The bill had much smoother pas than it was expected. White House was largely expected to veto the bill. However by Friday afternoon, President Obama, signed the legislation into law.

Despite its bigger longer term implications, in the short run Implication of that however has been limited, other than reduction in Brent-WTI spread. Brent-WTI premium shrank to lowest level since January, this year. Spread is currently at 70 cents per Barrel.

In reality, however US produced oil for now may not gain much of a demand, even from domestic producers. Cheap oil from Middle East at the moment flooding the gulf coast refiners and supply abroad is plenty at the moment.