DTN Oil Update
Oil up 2% on US Blockade of Venezuela, API Draw Report
SECAUCUS, N.J. (DTN) -- Fuel to oil futures rebounded Wednesday, Dec. 17, from the 2021 lows of the prior session after the U.S. announced a naval blockade on sanctioned oil tankers from OPEC producer Venezuela.
A second consecutive weekly draw to U.S. crude stocks reported by the American Petroleum Institute (API) added to the bullish sentiment.
NYMEX WTI for January delivery was up $1.04, or 2%, at $56.31 bbl after briefly falling beneath the key $55 bbl support on Tuesday.
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ICE Brent, which broke key $60 support in the prior session, was up $1.05, or 1.8%, to $59.97 bbl on its January futures contract.
NYMEX front-month gasoline rose $0.0161 to $1.6970 after a drop beneath $1.60 in the prior session. Front-month ULSD climbed $0.0239 to $2.1525 bbl.
U.S. President Donald Trump said late Tuesday, Dec. 16, that he had ordered a blockade of all sanctioned oil tankers in and out of Venezuela, which, according to cargo surveyors handled between 921,000 and 967,000 bpd of exports in November, with shipments mostly headed for China.
"Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America," Trump wrote on his social media platform. "It will only get bigger, and the shock to them will be like nothing they have ever seen before -- Until such time as they return to the United States of America all of the Oil, Land, and other Assets that they previously stole from us."
Under the order, any blacklisted tanker that tries to enter or leave Venezuela risks being boarded by the U.S. Navy or Coast Guard, having its oil seized or being forced to turn around. The blockade comes after U.S. forces seized a laden Venezuelan oil tanker last week.
The Trump administration has mounted a massive pressure campaign against the regime of Venezuelan President Nicolas Maduro, in support of the Latin American country's democratic opposition leader María Corina Machado.
On the U.S. inventory front, the API reported that U.S. commercial crude oil stocks fell by 9.3 million bbl during the week ended Dec. 12, extending the prior week's decline of 4.8 million bbl. Supporting the overall crude draw was
a 510,000 bbl decline at the Cushing, Oklahoma, delivery point for NYMEX West Texas Intermediate futures. It was also the second straight drop in Cushing balances, after an 890,000 bbl draw the previous week.
Gasoline inventories rose by 4.8 million bbl, extending a prior 7 million bbl build.
Distillate fuel oil stocks, meanwhile, increased by 2.5 million bbl, to add to the previous 1 million bbl rise.
Market participants will be verifying the API data against official inventory numbers due from the Energy Information Administration at 10:30 a.m. EST today.