Venezuela Crude Production Hits Highest Level in Nearly a Year
March 10, 2021
The API report had crude oil supplies up 12.8 million barrels and the estimates for today’s DOE inventory report is for supplies to be up 816,000 barrels. Gasoline stocks were down 8.5 million barrels and the estimate for today’s DOE down 3.5 million barrels. Distillate were down 4.8 million barrels and the estimate for today is for them to be down 3.5 million. Cushing, Oklahoma crude oil supplies were up 295,000 barrels.
The extreme cold that shut down refineries has tightened the physical markets and that lost production is now being realized in the physical market. Tight supplies impacts basis values, as basis is a reflection of supply and demand. Back on February 16 the group market for ULSD cash basis was $0.0175 over. As the lost production came to light group diesel basis began to move up. On March 5th cash basis reached a peak of $0.37 cent over. These basis moves are part of what impacts prices and this part of what has driven diesel price higher. The market is tight right now and that pushes up current prices. Yesterday afternoon basis on diesel sold off hard to $0.23 over. It was $0.36 over the prior day and that is a big one day move. Most of this decline was the result of supplies on the way but they are not here just yet. Today’s inventory will shed some light on current stocks levels and the outlook again as estimated above is for big draws in refined product stocks so the volatility of basis might now be over just yet.
According to S&P Global Platts, Venezuela’s crude oil production in February reached 555,000 bpd, the highest level in nearly a year. The government reportedly had begun using private companies to rehabilitate its oil wells, particularly in the Orinoco Belt. As prices have moved higher on crude oil the market seems to be getting more oil from places that have been impacted by sanctions, low prices and low demand but the trend seems to be shifting for more oil to come out of these places and that might be part of the reason that OPEC+ and especially Saudi Arabia was cautious to offer more barrels to the market.
US Energy Secretary, Jennifer Granholm, said the country needs to increase its domestic production of minerals used to make electric vehicles. She said the DOE is focused on the entire supply chain of electric vehicles, including increasing domestic mining.
From Bloomberg more reports for strong economy. Morgan Stanley raised its 2021 forecast for US economic growth to 7.3% from 6.5%, a pace unsurpassed since the Korean War boom. The OECD on Tuesday more than doubled its 2021 US growth forecast as it incorporated the latest aid package. The OECD also upgraded its economic outlook for China by 7.8%, the Eurozone by 3.09%.
Estimates for the propane report today is a 1.7 million barrel draw.