Published: Sun, January 27, 2019
Money | By Arnold Ball

Venezuelan crisis buoys prospects for Canadian heavy crude oil producers

Venezuelan crisis buoys prospects for Canadian heavy crude oil producers

This week, things got worse.

As tensions between the administration of Venezuelan President Nicolas Maduro and the self-proclaimed interim president Juan Guaido continue, officials and experts worldwide have voiced their concerns over the situation, appealing for dialogue while calling for the issue to be resolved without outside influence.

"Sharp production cuts by OPEC+ have kept crude oil futures supported, however, as market reports indicate for a marked output reduction in Dec 2018", said Benjamin Lu, analyst at Phillip Futures. Venezuela also imports 150,000 b/d of petroleum product from the United States, including 75,000 barrels of diluent - a light hydrocarbon that is used to dilute bitumen so it can be transported in pipelines. The perception of oil's supply-demand imbalance likely worsened as world leaders voiced concerns over the slowing global economy in Davos, which could have contributed to the drop in oil prices early in the week.

Mr. Monaldi said the US imports account for 80 per cent of PDVSA's revenue.

Prices leaped about 20 percent to start the year, buoyed by output cuts by OPEC, Russia and other major producers.

U.S. West Texas Intermediate (WTI) crude futures were at 53.34 dollars per barrel, up 21 cents, or 0.4 per cent. But the rally has slowed on fears of weakening global growth, exacerbated by the U.S. Gas Energy, a Caracas-based consultancy, said in a report that India was the second-largest importer of Venezuelan crude in November. Mars traded at a $7.10 premium to USA crude on Thursday, a five-year high, according to Refinitiv Eikon data, as bidders came into the market to secure supplies through the second quarter, traders said.

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Oil prices declined on Thursday on lingering concerns that slowing global economic growth may limit fuel demand and after a surprise build in US crude inventories.

Separately, the EIA's annual energy outlook report released Thursday said US crude oil production is expected to continue to set annual records through the mid-2020s and will remain greater than 14.0 million barrels per day through 2040.

"It would make a tight market even tighter".

Sanctions could also include US exports of petroleum products to Venezuela that are used for blending with Venezuelan heavy crude.

Venezuelan oil exports to the US have declined steadily over the years, falling particularly sharply over the past decade as its production plummeted amid its long economic and political crisis. Articles appear on for a limited time.

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