Current XOM Stock Info

Congress expected to vote to lift crude oil export ban; economists worry about low inflation
An end to the more than 40-year old crude oil export ban could soon be approaching. Members of Senate this week are expected to include a provision that will lift the export ban as part of the fiscal 2016 spending bill, aides from both parties said. The spending bill is expected to be decided this week before Congress goes on break for the holidays.

In exchange for removing the export ban, Democrats are asking that at least a five-year extension be ...

Analyst Commentary

Roger Read, Wells Fargo Securities. 12.14.2015
In our view, the market is overreacting in regards to the refiners, especially Delek (DK) which is down 9.2% today, over the potential lifting of the ''crude export ban.'' Mid-Con and East Coast refining stocks are suffering today with losses ranging from 3-9% versus SPX up 0.04%. We are highly unlikely to make significant changes to our 2016 EPS/CFPS estimates based on a lifting of the ''oil export ban.'' This is because the Brent/WTI differential we forecast for 2016 is well within the range that would support increased crude exports (beyond those already going to Canada).

Based on our forecast for falling U.S. crude production in 2016, our Brent/WTI differential forecast is $3.25/bbl. Given that it would cost approximately $5.00/bbl to account for pipeline tariffs (estimated $3.00/bbl), vessel loading (at least $1/bbl) and crude quality adjustment ($1/bbl) we see the export ban as having little impact on our 2016 expectations. Last week at our conference in a fireside chat format PSX management indicated that its view of lifting of the ban was no material impacts in 2016, but that near-term weakness in refining equities would be expected. In our view, that is what is occurring today.

Summary. As part of an omnibus spending bill, the U.S. Congress may be close to lifting the +40-year old ''crude export ban.'' Versus our expectations, this is occurring approximately 18 months ahead of schedule as we expected the next Presidential administration would be the one to lift the ban. However, the stars aligned sooner and thus an early Christmas present for the E&P sector and a stocking full of soot for the refiners .  


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