Oil Up on Venezuela While Glut Concerns Cap Rally


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures rose for a second consecutive session 
Tuesday (1/6) as market participants continue monitoring the developments in 
Venezuela after the capture of President Nicolas Maduro by U.S. forces during 
the weekend.

   But persistent concerns about the oversupply of oil despite OPEC's freeze of 
output hikes in the first quarter capped the upside.

   The U.S. December ISM Manufacturing reading of 47.9 issued Monday (1/5) also 
showed factory output in decline for a tenth consecutive month, a development 
that directly affects diesel demand as less trucking activity may be needed to 
carry goods.

   Political uncertainty hung heavily over Venezuela after Interim President 
Delcy Rodrguez was sworn in while voicing her support for Maduro, who was 
indicted in a New York court with his wife Cilia Flores on charges of 
narco-terrorism which they denied.

   While Venezuela accounts for less than 1% of global supply at around 1.1 
million bpd, its output could be further constrained by political, legal and 
production-related hurdles. 

   OPEC's decision to keep output unchanged through March comes after the 
International Energy Agency's warning of a potential 3.8 million bpd glut this 
year amid weaker demand and surging non-OPEC production led by the U.S., Brazil 
and Guyana.

   WTI could drop back to the low $50s bbl if U.S.-Venezuelan collaboration 
could expeditiously result in higher production, some analysts say. Others 
maintain that significant output increases are likely years away due to the 
catastrophic state of Venezuela's aging oil infrastructure.

   The NYMEX WTI contract for February delivery was up $0.36, or 0.6%, at 
$58.68 bbl, extending Monday's rally of 1.7%. ICE Brent for March delivery 
climbed $0.40, or 0.6%, to $62.14 bbl, following the prior session's rise of 
1.7%.

   Refined products were mixed as RBOB futures for March rose $0.0118 to 
$1.7318 gallon while ULSD for February slid $0.0245 to $2.1184.

   The U.S. Dollar Index was up 0.183 points at 98.165, limiting the advance in 
commodities.




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