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Oil Markets Aren’t As Bad As They Look

Oil Rig

Friday November 4, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Venezuela’s cash reserves running out

(Click to enlarge)

(Click to enlarge)

- The two Bloomberg charts depict the increasingly dire situation in Venezuela. Cash reserves plunged to a 14-year low of $10.9 billion in October, as its economy descends deeper into crisis.
- Fortunately, the state-owned PDVSA managed to convince investors to extend repayment on $2.8 billion in bond payments that were due next year.
- That bought Venezuela some time, reducing the risk of default. But with few resources left, Venezuela won’t be able to kick the can down the road forever.
- Based on credit-default swaps, Bloomberg says that the market is pricing in a 91 percent chance of a Venezuela default within the next five years.
- Oil production has already declined by more than 10 percent this year, and will continue to deteriorate.

2. China’s oil production falling

(Click to enlarge)

- In addition to countries like Venezuela, China is also losing oil production. China’s three main oil producers – PetroChina, Sinopec and Cnooc – saw their output fall by a combined…

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