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Chart: U.S. Crude Oil Exports Rise

In December 2015, Congress made a historic decision to lift its ban on crude oil exports that had been in place for 40 years. Aside from the exemption of exports to Canada, the ban essentially isolated U.S. oil production from the rest of the world. Since the ban’s removal, exports have been trending upwards, with a significant spike in September. During the month, a particularly powerful hurricane season knocked offline meaningful refining capacity in the US, driving many oil producers to look to refineries overseas. In addition, the spread between the international oil benchmark, Brent, and the US-based West Texas Intermediate (WTI) expanded to a two-year high, incentivizing international oil importers to purchase U.S. oil.

With the global economy enjoying synchronized growth and rising oil demand, the ability of US oil production to efficiently reach overseas destinations highlights the importance of the US energy infrastructure responsible for piping the commodity to export terminals in the Gulf of Mexico.

Related ETFs

MLPA: The Global X MLP ETF invests in some of the largest, most liquid midstream master limited partnerships (MLPs)

MLPX: The Global X MLP & Energy Infrastructure ETF is a tax-efficient vehicle for gaining access to MLPs and similar entities, such as the general partners of MLPs and energy infrastructure corporations.

Authored by: Rohan Reddy

Date:
Oct 27, 2017

Category:
Insights

Topics:
Commodities

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Global X Management Company, LLC serves as an advisor to the Global X Funds. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Global X Management Company, LLC.

Investing involves risk, including possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Investments in securities of MLPs involve risk that differ from investments in common stock including risks related to limited control and limited rights to vote on matters affecting the MLP. MLP common units and other equity securities can be affected by macro-economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards MLPs or the energy sector, changes in a particular issuer’s financial condition, or unfavorable or unanticipated poor performance of a particular issuer (in the case of MLPs, generally measured in terms of distributable cash flow). The Global X MLP Funds invest in the energy industry, which entails significant risk and volatility. The Funds invest in small and mid-capitalization companies, which pose greater risks than large companies. The Funds have a different and more complex tax structure than traditional ETFs and investors should consider carefully the significant tax implications of an investment in the Fund. The Funds are non-diversified.

The potential tax benefits from investing in MLPs depend on them being treated as partnerships for federal income tax purposes. If the MLP is deemed to be a corporation then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund’s value. .

Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns..

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