26 June 2014, News Wires – US crude oil inched higher on Wednesday after news of a US government decision to permit exports of minimally refined condensate, while Brent oil fell as fears of supply cuts from Iraq receded, according to a report.
US crude reversed a two-day downward trend, after US federal officials approved exports of condensate, an ultra-light oil, in a marginal relaxation of a 40-year ban on US oil exports, Reuters reported.
The rally lost some momentum after weaker-than-expected data from the US Energy Information Administration (EIA) pointed to a potential dip in demand growth from the world’s largest oil consumer and as traders awaited some clarification of what the condensate ruling would mean for the market.
“There are still a lot of questions about how aggressive the US will be in exporting condensate,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Brent lost 46 cents to settle at $114 per barrel, as worries about sectarian violence reducing Iraqi exports seemed to fade. Brent hit a nine-month high of $115.71 last week on the fighting in Iraq.
US crude gained 47 cents to settle at $106.50 per barrel. It had hit $107.50 in early trade as the market reacted to the news on US condensate exports.
The spread between the two benchmarks narrowed to close at $7.50, after it had widened to $9.01 last week.
US officials have told energy companies they can export a variety of condensate if it has been minimally refined, a US Commerce Department spokesman confirmed to Reuters, although he said there had been “no change in policy” towards crude exports.
Analysts say allowing more US oil to be exported could help tighten the domestic market, pushing up prices.
Brent had made sharp gains in the past two weeks on concerns over fighting in Iraq, Opec’s second-largest producer and exporter.
But with exports from Iraq’s southern terminals running near record levels and most of the country’s oilfields in the peaceful south, far away from the Sunni insurgency, worries about supply have been easing.