• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 33 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 hour How Far Have We Really Gotten With Alternative Energy
  • 3 hours If hydrogen is the answer, you're asking the wrong question
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 16 hours Biden's $2 trillion Plan for Insfrastructure and Jobs
  • 4 days "What’s In Store For Europe In 2023?" By the CIA (aka RFE/RL as a ruse to deceive readers)
The Hunt for White Hydrogen Has Begun

The Hunt for White Hydrogen Has Begun

Mined natural hydrogen (also called…

Why OPEC Should Be Worried About Oil Demand Forecasts

Why OPEC Should Be Worried About Oil Demand Forecasts

Demand forecasts from the IEA,…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Premium Content

Venezuela’s Oil Industry To Receive Another Shot In The Arm From China

As the U.S. dollar climbs higher and higher (and higher), the crude complex is getting blown over by the gale-force headwinds it is providing. We edge closer and closer to the main event of the month (--->>> the OPEC meeting), but for now, hark, here are five things to consider in oil markets today:

1) Venezuela is apparently set to cut Petrocaribe oil and refined product supplies by 40 percent next year - in an effort to sell its exports elsewhere for more money. Petrocaribe is an alliance of 18 Caribbean and Central American countries who receive petroleum products from Venezuela at a preferential rate.

As Venezuelan production has been dropping in recent years, our ClipperData illustrate below that even flows into the key markets of China, India and the U.S. have also seen some drop-off.

Given the proximity and sophistication of U.S. Gulf refiners, it makes sense that the U.S. is the leading destination for Venezuela's heavy crude. This is further affirmed by joint ventures in the U.S. refining hub. Venezuelan grades into the U.S. are at 744,000 bpd through the first ten months of the year, down nearly 5 percent on year-ago levels.

Venezuelan grades into India have actually increased, up 50,000 bpd versus year-ago levels to 450,000 bpd so far this year. While rising Indian demand is increasing the pull for Venezuelan crude, bartering deals are also a driver of flows, with Venezuela using its crude as a way to pay off debts.

As for imports into China, they are averaging around 190,000 bpd, slightly down on last year. Venezuela already owes China $50 billion from financing agreements made over the last decade, and President Maduro announced yesterday that a further $2.2 billion will be tapped from a credit line provided by China to provide a shot in the arm to its ailing oil industry.

(Click to enlarge)

2) Following on from the above, we continue to monitor flows of naphtha and light crude from the U.S. to Curacao. PdVSA needs this to blend with its heavy crude; if flows of diluent dry up to the island, it could indicate Venezuela's pockets are empty.

Nigeria was sending light sweet Qua Iboe and Brass River to Curacao earlier in the year, but this stopped in March (credit issues? perhaps). A sole delivery of North Sea crude arrived in February, before Kazakhstani light grade Batumi arrived in March. Since then, we have had consistent WTI deliveries, despite ongoing payment disputes.

(Click to enlarge)

3) According to the National Petroleum Directorate, preliminary estimates for oil, natural gas liquids and condensate production in October was far higher than expected, coming in 30 percent above the previous month at 1.71mn bpd. This was 10 percent higher than the government expected (a nice surprise, I bet).

4) Yesterday we discussed how loadings of Bonny Light were continuing to hold up this month, despite a resurgence of militant attacks in Nigeria. According to reports today, another grade that has been plagued with force majeure this year - Forcados - has apparently had production shut in after a pipeline was attacked in recent weeks. We are avidly watching our ClipperData for signs of exports drying up; the last loading we saw of the grade was earlier in the week.

5) Finally, natural gas storage climbed to a further record high yesterday of 4,047 Bcf, as the weekly storage report showed a 30 Bcf injection. This compared to a 26 Bcf injection last year, and a 3 Bcf injection for the five-year average; heating degree days (a proxy for heating demand) came in 35 percent below normal. It is still in the balance as to whether we will see another injection next week; we may be at the peak now.

ADVERTISEMENT

(Click to enlarge)

By Matt Smith

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Kr55 on November 18 2016 said:
    That $2.2B should help get Venezuela through the weekend.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News