Bloomberg reported that Valero Energy Corp. is considering using barges and rail to move Canadian oil to the Gulf Coast as the government weighs approval of the Keystone XL pipeline, the most economic option, Valero President Joe Gorder said. Valero could increase the amount of Canadian crude it moves by barge to its St. Charles refinery in Louisiana from Hartford, Illinois, a delivery point on an existing TransCanada Corp.line, Gorder said. Valero also owns heated rail cars and could use them to send Canadian bitumen to Louisiana and Texas. Crude production in Canada is outpacing takeaway capacity, creating a glut in Alberta that depressed prices to a record low last month against Mexico’s Maya crude, the heavy oil benchmark used on the Gulf Coast. TransCanada’s Keystone XL construction requires State Department authorization because it would cross the U.S.-Canada border.
A reason to be long natural gas years out in the future! Reuter’s reports the average price of liquefied natural gas (LNG) in Asia this year is likely to reach all-time highs near $16.90 per million British thermal units (mmBtu) as demand growth outstrips supply, Goldman Sachs said in a note. "The global LNG market tightness created by the surge in Japanese natural gas imports following the Fukushima nuclear crisis in 2011 has extended and intensified in the recent period, with increased demand from South Korea and South America," Goldman Sachs said this week. Drought-hit Brazil is ramping up LNG imports in an effort to replace depleted hydroelectric power reserves but faces stiff competition for cargoes from neighboring Argentina, which is also experiencing record demand for seaborne gas.
We called the lows in oil in December and despite the recent run up, a correction is getting closer. If you are buying here for the last $1-$2, make sure you protect your downside with some puts.