DTN Oil Update
WTI at $55 on US Plans for Venezuelan Oil Supply
SECAUCUS, N.J. (DTN) -- Crude futures tumbled by 2% for a second consecutive day on Wednesday as traders priced in a rapid influx to U.S. supply after the Trump administration said it was taking ownership of stockpiled Venezuelan oil amid plans to indefinitely control the OPEC member country's sales.
Energy prices attempted to stabilize after a second straight weekly draw in U.S. crude stockpiles reported by the Energy Information Administration (EIA).
Still, a fresh wave of selling hit both the WTI and Brent benchmarks as U.S. President Donald Trump said Venezuelan oil on board storage ships would be brought directly to unloading docks in the United States. Media reports on Wednesday said the U.S. had seized a tanker carrying Venezuelan oil in the Atlantic, the third such seizure since last month.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
U.S. Energy Secretary Chris Wright said the oil when transferred would be under U.S. control. "Indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace," CNBC quoted him as saying at an energy conference hosted by Goldman Sachs in Miami. Trump is due to meet U.S. oil executives on Friday for further discussions on Venezuela, reports said.
Since the weekend capture of Venezuelan president Nicolas Maduro by U.S. forces brought the OPEC member country under Washington's control, the Trump administration has spoken of plans to return Venezuelan oil production to its glory days with the help of U.S. oil majors.
Venezuela produces around 1 million barrels per day (bpd) now, according to OPEC, versus its heyday output of 3.5 million bpd. U.S. production itself has hit a record 13.9 million bpd since the middle of last year.
"I'm not sure how well this is all going to pan out for Venezuela, but for a country producing almost 14 million barrels (daily) on its own, the U.S. doesn't need this now," John Kilduff, partner at New York energy hedge fund Again Capital, told DTN.
On the U.S. inventory front, commercial crude stocks declined by 3.8 million barrels (bbl) to 419.1 million during the week ended Jan. 2, extending the 1.9-million decline of the prior week, the EIA said.
Distillate inventories rose by 5.6 million bbl to 129.3 million, after a prior weekly build of 5 million. Total motor gasoline stockpiles increased by 7.7 million bbl to 242 million, adding to the previous weekly surplus of 5.8 million.
The NYMEX WTI contract for February delivery settled down $1.18, or 2%, at $55.99 bbl.
ICE Brent for March delivery closed down $0.74, or 1.2%, at $59.96 bbl.
RBOB futures for February dipped $0.0019 to $1.7242 gallon while the front-month ULSD for February fell $0.0186 to $2.0644.
The U.S. Dollar Index rose by 0.11 points to 98.43 against a currency basket.