The oil complex trading lower this morning. Crude made some upward movement during yesterday’s trade, closing the day 58 cents higher supported by a constructive API report. However, it could not maintain its upward momentum this morning as prices have fallen 26 cents to trade at $65.26 currently.
Fuel prices are also showing loses this morning, tracking crude lower. Both products closed over a penny lower on Tuesday. Diesel prices are down a mere 7 points this morning, trading at $2.1409. Gasoline prices are down to $2.0972, a loss of 90 points.
Venezuelan state oil company PVSD is considering declarations of forced majeure on its crude exports. Declining production due to the country’s economic crisis will prevent PVSD from meeting its contractual supply obligation for the month of June. Clients may only receive as little as 50% of their contracted volume.
The company has also told some customers to send ships equipped for ship-to-ship oil transfers rather than loading at their overcrowded ports. If a customer does not accept these terms, PVSD may not be able to fulfil its contractual obligation. PVSD has been using U.S. sanctions as their reasoning for this operational change. Concerns around tightening global supply provided some support for prices on Tuesday.
The API released their weekly inventory data yesterday, which similar to last week showed a draw in crude and diesel and a build in gasoline. Although crude and diesel inventories fell, gasoline inventories built by 3.8 MMbbls, putting a lid on any significant price increases for the oil complex. The market is anticipating the EIA data coming out later this morning to confirm these estimates.
This article is part of Crude