Crude oil futures rose after the US revoked Chevron’s licence to operate in Venezuela. Brent and WTI futures saw minor increases, while inventory reports indicated a drop in US crude inventories. Former President Trump’s social media post detailed the termination of previous concessions made by the Biden administration. The report also highlighted changes in gasoline and distillate fuel supplies.
Crude oil futures exhibited an upward trend on Thursday following the revocation of Chevron Corporation’s licence to operate in Venezuela by the US government. Brent oil futures for May rose to $72.28, an increase of 0.29%, while WTI crude oil futures for April reached $68.74, up by 0.17%. In the Indian market, March crude oil futures on the Multi Commodity Exchange (MCX) traded at ₹6022, reflecting a rise of 0.37% from ₹6000, and April futures climbed to ₹6028 from ₹6004, showcasing a 0.40% increase.
On Wednesday, former President Donald Trump announced the decision to revoke the licence initially granted to Chevron by the Biden administration. In a post on Truth Social, Trump stated that his administration would terminate concessions made to Nicolás Maduro, Venezuela’s president, related to an oil transaction agreement dated November 26, 2022. He criticized the Venezuelan government’s failure to meet obligations concerning the return of violent criminals to the US as part of the agreement.
According to Warren Patterson and Ewa Manthey of ING Group’s Commodities team, the withdrawal of Chevron’s operating licence marks a shift in focus from sanctions on Iran’s oil industry to Venezuela. This change has resulted in increased differentials for medium sour crude grades, with a significant rise of more than $1 per barrel for these grades to $1.71. Currently, US imports of Venezuelan crude oil average approximately 270,000 barrels per day in 2023.
In the latest weekly petroleum report from the US Energy Information Administration (EIA), there was a noted decrease in crude oil inventories by 2.3 million barrels for the week ending February 21, bringing the total to 430.2 million barrels, which is about 4% below the five-year average. Conversely, gasoline inventories increased by 0.4 million barrels but remained slightly below the five-year average. Finished gasoline inventories fell while blending components saw an uptick.
For the past four weeks, total petroleum supplied in the US has averaged 20.3 million barrels daily, up by 4.2% year-over-year. Motor gasoline product supplied averaged 8.4 million barrels per day, exhibiting a minor decrease of 0.1%, while distillate fuel product supplied increased by 13.1%, averaging 4.2 million barrels daily. Jet fuel supply also experienced a rise of 4.5% compared to the previous year.
During the week ending February 21, US crude oil refinery inputs were 15.7 million barrels per day, an increase of 317,000 barrels compared to the prior week, with refineries operating at 86.5% of their capacity. Gasoline production averaged 9.2 million barrels daily, while distillate fuel production rose to an average of 5.2 million barrels.
In the commodities market, March natural gas futures traded at ₹347.80 on MCX, down by 0.54% from ₹349.70, while March cottonseed oilcake contracts were priced at ₹2646 on NCDEX, reflecting a decrease of 0.45% from ₹2658. Similarly, March guargum futures were trading at ₹10010, down by 0.41% from the previous close of ₹10051.
The revocation of Chevron’s operating licence in Venezuela has pushed crude oil futures higher, reflecting tensions in the region and altering trade dynamics. The EIA’s report on inventory levels indicates a decline in US crude oil supplies while gasoline inventories show a slight improvement. The market adjustments indicate ongoing volatility influenced by political and operational changes surrounding oil production and exports.
Original Source: www.thehindubusinessline.com
