Market Report & Analysis for 5/2/2019 Morning Edition

by | May 1, 2019 | EMI, Fuels & Markets, Industry News

Morning Market Overview

New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange settled Tuesday’s session higher on political unrest in Venezuela, and as Saudi Arabia throws support behind extending an Organization of the Petroleum Exporting Countries production agreement. Oil futures were lifted on reports of renewed street clashes in Venezuela after the opposition leader called for a military uprising.

Juan Guaido urged the Venezuelan military, which has so far demonstrated steadfast support for Nicolas Maduro, to join his side, while claiming that the military coup is already underway. According to several wire services, crowds poured onto the streets and by Tuesday afternoon some members of the military, National Guard, and armed forces appeared to have switched sides in solidarity with the opposition.

It is unclear, however, how much of the military currently supports Guaido’s efforts, as Maduro issued a statement that the military showed a total loyalty amid ongoing provocations. U.S. President Donald Trump tweeted on Tuesday that the United States stands with people of Venezuela and their Freedom!

Energy Information Administration said Venezuela’s crude oil production collapsed to 840,000 bpd in March, the lowest level since January 2003, when a national strike brought PDVSA’ operations to a near halt. Widespread power outages, mismanagement of the country’s oil industry and U.S. sanctions all contributed to the industry’ latest downturn.

Oil futures also drew support from Saudi Energy Minister’ statement that OPEC and its allies could extend the production cut agreement beyond June. Al Falih told Russia’s RIA News global oil inventories are still above the normal level and some kind of extension to the deal is currently warranted. Saudi official added the kingdom’s oil production in May would remain below 10 million bpd, with exports averaging below 7 million bpd.

Under the OPEC+ deal, Riyadh can produce up to 10.3 million bpd. Markets now await the weekly rundown of supply data in U.S. inventory levels, with the market consensus calling for a 1.4 million bbl increase in commercial crude stocks for the week ended April 26, while gasoline supply is estimated to have been drawn down by 1 million bbl.

Distillate fuel stockpiles were called 1.2 million bbl lower at 125.8 million bbl during the profiled week.