On the table: Republican demands to end the ban on exporting crude oil emerged as a final negotiating point today as lawmakers scrambled to complete a year-end spending bill needed to keep the government running. The Associated Press reports Democrats are seeking various environmental concessions, including permanently extending tax credits for solar and wind energy production and reviving an environmental conservation fund, in return for lifting the 4-decade-old ban. Democrats also were trying to block GOP efforts to roll back Obama administration environmental regulations, with Democratic lawmakers who traveled to the Paris climate talks returning energized to fight harder on such issues. Read the full story.
Lower still: As oil crashes through $35 a barrel in New York, some producers are already living with the reality of much lower prices. A mix of Mexican crudes is already valued at less than $28, an 11-year low, according to data compiled by Bloomberg. Iraq is offering its heaviest variety of oil to buyers in Asia for about $25. In western Canada, some producers are selling for less than $22 a barrel. Oil has slumped to levels last seen in the global financial crisis in 2009 amid a global supply glut. While the prices of benchmarks West Texas Intermediate and Brent hover in the $30s, they represent a category of crude—light and low in sulfur—that is more highly valued because it’s easier to refine. Some producers of thicker, blacker and more sulfurous varieties have suffered heavier losses and are already living in the $20s. Read the full story.
Scrambling for an exit: Investors are rushing out of junk bonds, spooked by last week’s closure of a mutual fund focused on some of the lowest-quality, highest-yielding bonds. The Associated Press reports the shutdown comes on top of fears that a spike in bond defaults is coming, and it has led investors to rush for the exits in a corner of the market that generally doesn’t handle such things well. The price drops are hitting many investors who are new to junk bonds and have little experience with the notoriously volatile market. Since the Federal Reserve slashed interest rates to a record low in 2008, investors have been creeping into ever-riskier options in search of more income. They’ve been attracted to junk bonds, also known as high yield, because they pay higher interest rates than high-quality bonds. The downside is that they’re issued by companies more likely to default, socking investors with losses. Read the full story.
