Oil prices have risen after Venezuelan opposition leader Juan Guaido called for military support to put an end to President Nicolas Maduro’s rule but pared gains following the stipulation that the state-run oil company PDVSA’s operations were not disrupted and top military leaders were staying loyal. “The possibility that Guaido will take control of the situation isn’t as strong as perceived this morning,” commented Bob Yawger, director of energy futures at Mizuho in New York. “If Maduro hangs on, you’ll see the market stay lower.”
Crude prices also paired their gains after the American Petroleum Institute reported that US crude inventories went up by almost 7 million barrels last week, more than the forecasts of 1.5 million. Venezuela’s exports have been already affected by US sanctions on PDVSA and an economic crisis, helping to limit OPEC’s production to a four-year low. If Nicolas Maduro remains in power for longer, Venezuela’s crude exports and production will keep on declining as the OPEC producer is dealing with a domestic collapse. “The situation appears to be getting much worse, rather than better,” said Phillip Streible, senior commodities strategist at RJO Futures in Chicago. “Their oil production is going to continue to slide.”
Earlier, oil prices drew support when Saudi Arabia Energy Minister Khalid al-Falih said that the output freeze deal between producers could be extended through the end of this year. The White House is in the meantime putting pressure on OPEC to boost its production as the sanctions on Iran are further curbing the oil supply in international markets. Moreover, OPEC confirmed that non-OPEC allies led by Russia would also stick to the agreement and cut their output by around 1.2 million for six months until the end of June.
