Oil steady as USA gasoline glut offsets Venezuela turmoil

Oil steady as USA gasoline glut offsets Venezuela turmoil

The United States signaled on Thursday it may impose sanctions on Venezuelan exports after recognizing opposition leader Juan Guaido as interim president this week, prompting President Nicholas Maduro to cut ties with Washington. Venezuela holds the group's rotating presidency this year, which means the nation's oil minister and PDVSA president Manuel Quevedo is OPEC's sitting president for 2019.

Quoting the Annual Statistical Bulletin of the Organization of the Oil Exporting Countries (OPEC), the "NDTV" had stated that Venezuela had 296.5 billion barrels of oil under its control. Here's a look at how such a move might affect both countries.

“The oil market is partially pricing in the risk to Venezuela's crude production, which has been plummeting in recent years, ” Vandana Hari of Vanda Insights said.

More broadly, the slide in USA oil followed a tumble in global stock markets on Tuesday, with investors anxious about the threat of a widespread economic slowdown.

The United States, the top importer of Venezuelan crude, is seeking to ensure that the OPEC member's oil revenue goes to opposition leader Juan Guaido, who swore himself in as interim president, and to cut off money from President Nicolas Maduro, a top US official said on Thursday.

Also sustaining higher prices, supply concerns in Libya and Venezuela are set to persist for the time being, while current USA sanctions limiting Iranian oil exports also collaborate with the better sentiment.

Still, the long-term trend is a declining dependence on Venezuelan oil.

The biggest USA importers of Venezuelan crude past year were Citgo, Valero and Chevron, according to Rystad Energy.

Crude oil production in the U.S.is expected to average 12.1 million bpd in 2019 and 12.9 million bpd in 2020, according to the EIA's Short-Term Energy Outlook report for January.

International Brent crude oil futures were at $60.89 a barrel at 0352 GMT, down 25 cents, or 0.4 percent, from their last settlement, having closed down 0.6 percent in the previous session.

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Global oil markets are still well supplied, however, thanks in part to surging output in the U.S.

Suspense over U.S. -China trade talks and broader gloom over world economic growth put a check on prices, however.

IHS Markit Vice Chairman Daniel Yergin on the state of the oil market. They'll have to find heavy crude elsewhere. That could mean designating the Guaido government as the legitimate steward of Venezuela's assets, including USA refineries owned by Citgo, the refining subsidiary of state-owned energy company Petróleos de Venezuela. The only countries that sent more crude to the United States were Canada, Saudi Arabia and Mexico.

In the event of a change in government, global oil prices could rise in the short term, but decline as time goes on, analysts believe.

The American Fuel & Petrochemical Manufacturers, which represents 95 percent of the refining sector, has lobbied hard over the past two years against any attempts to restrict imports of Venezuelan oil.

'The scarcity of heavy oil in the Gulf Coast will increase the price, plus the fact that you have to import from a place like Iraq, makes it a little costlier, ' said Monaldi.

Other industries that rely heavily on oil may feel impacts. That's because light oil yields more gasoline than diesel, so as fuel producers seek to ramp up diesel production, they are piling up on excess gasoline. If the Trump administration pulls the trigger on energy sanctions, those declines could balloon to several hundred thousand more barrels, says Helima Croft, global head of commodity strategy at RBC.

Venezuela is very reliant on the USA for its oil revenue.

Venezuelan President, Nicolas Maduro, has struck back against his opponents, winning strong support from the country's armed forces and the solid backing of Russian Federation, which warned the United States not to intervene. That's because Venezuela's oil shipments to China and Russian Federation are usually taken as repayment for billions of dollars in debts.

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