Oil Futures Steady as Oversupply Balances Venezuela Risks


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures steadied on Tuesday (12/23) as oversupply 
concerns balanced U.S. actions against Venezuelan oil amid thinner and volatile 
trading conditions typical for a holiday season.

   Tit-for-tat attacks between Russia and Ukraine -- aimed at the maritime 
assets of each other -- however provided some geopolitical risk to oil, which 
typically rises in such circumstances.

   NYMEX WTI crude for February delivery was down by $0.12, or 0.2%, to $57.89 
bbl.

   ICE Brent futures for February slid by $0.20, or 0.2%, to $61.87 bbl.

   Downstream, NYMEX front-month gasoline dipped by $0.0060, or 0.4%, to 
$1.7362 gallon. Front-month ULSD bucked the downtrend, climbing by $0.0156, or 
0.7%, to close at $2.1743 gallon.

   Crude to fuel futures were broadly higher earlier on Tuesday, extending the 
rally for a fifth straight day on immediate supply risks. "All these year-end 
risk premia have given a flip to oil, which should otherwise be going down on 
heavy supply and seasonally thinner holiday trading conditions," said John 
Kilduff, partner at New York energy hedge fund Again Capital.

   Crude futures hit 2021 lows last week, sending WTI and Brent beneath the key 
$55 and $60 mark, respectively, on prospects for Russia-Ukraine peace that 
could lift sanctions on Russian oil, adding millions of more barrels to an 
already oversupplied market. The International Energy Agency has warned that 
supply could exceed demand by 3.8 million to 3.84 million bpd in 2026.

   WTI and Brent have, however, rebounded by about 5% from the lows of last 
week as the market's focus turned to near-term supply risks following seizures 
by U.S. forces over the past two weeks of two tankers carrying Venezuelan oil 
and their pursuit of another such vessel in international waters.

   The actions came after a naval blockade of Venezuelan oil imposed by the 
Trump administration, which supports the Latin American country's democratic 
opposition leader Maria Corina Machado against Venezuelan President Nicolas 
Maduro. OPEC member Venezuela exports about one million bpd.

   Despite the U.S. actions, more than a dozen vessels have loaded oil off the 
Venezuelan coast since the naval blockade announced by the Trump 
administration, reported Bloomberg, which also cited ship tracking data showing 
a Russian crude cargo from U.S.-sanctioned Rosneft delivered to a Chinese oil 
terminal after three months at sea.

    

    




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