Thursday June 26, 2014
For the first time since the 1970s the US will be exporting oil. This is a result of increased production in the Shale areas of ND and South Texas as well as the Permian Basin.
What could go wrong? Glad you asked.
Valero
VLO dropped 8.3% on over 4x normal volume. Why? The thinking is that the refiners have had their pick of what oil to refine. With more output than ever and no exports, there has been a bit of surplus of oil to refine. Now the lighter grades or condensate will be exported. US Refiners have geared up for the heavier grades of oil. But as the saying goes, there is always a fundamental event to verify the technical result. And here VLO has nearly doubled from its October low at 32.5 to 57. A correction was probably inevitable. The news apparently triggered a wave of stop sell orders placed under the current price. The result was a wave of computer generated selling.
Is this a long term deal or just a short term knee jerk reaction, we shall see. NOthing boring about oil trading.
Professor Elam 
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