In this issue:

It’s hard to see the repeal of the U.S. crude exports ban as a global game-changer while the U.S. remains a major oil importer. But it’s a welcome cleanup of an antiquated restriction that has, on margin, taxed the ailing U.S. drillers to the benefit of domestic refiners.

It’s instructive to see that the horse trading that still works in Congress provides for a carefully balanced dispersal of corporate subsidies. The extension of renewable tax credits exchanged for the oil exports repeal is a game saver at the very least, one that will tide the industry over for the next six years until it can take advantage of a somewhat less direct but probably no less helpful government mandate.

The cheapest current source of energy, natural gas, doesn’t require a subsidy to compete beyond all the usual tax breaks for producers of hydrocarbons. But it could definitely use a friendly hand with eminent domain seizures and such, as midstream operators push new pipelines linking consuming regions to emergent sources of supply.

Should these come to be built (and we believe they will) the current natural gas price will seem much too low in retrospect a couple of years from now. In the shorter term, though, supplies remain bloated and the potential for more near-term price weakness can’t be dismissed.

If you bought the VelocityShares 3x Long Natural Gas ETN (UGAZ) following the advice in our Energy Trader feature two weeks ago, sell it here for a gain of 46%.     

Commodity Update

Prices have stabilized somewhat from the sharp drop following the recent OPEC meeting. Since our previous issue, West Texas Intermediate (WTI) has gained $1.24 to $36.86/bbl. Brent crude fell $1.18 to $36.75/bbl — notable because it is below the price of WTI for the first time in years. This is a direct consequence of ending the crude oil export ban, as traders anticipate that WTI — of slighter higher quality than Brent — will have a bit of an edge on the global market. Natural gas strengthened a bit as it added $0.17/MMBtu since our previous issue to $2.16/MMBtu.

In Other News

• The 40 year old crude oil export ban ended after President Obama signed into law a comprehensive spending bill

• The same spending bill that repealed the crude export ban also extended the Production Tax Credit (PTC) for renewable power production and the solar Investment Tax Credit

• Enterprise Products Partners (NYSE: EPD) will likely become the first company to export US oil the ban was lifted, after it announced it will load a 600,000 barrel cargo of domestic light crude

• A massive natural gas leak has forced Southern California Gas to relocate more than 2,000 families in a California community