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Trends

Rotterdam: $ 1 higher
Singapore: $ 5 lower
US Gulf: $ 2 higher

Venezuela starts symbolic production in Orinoco (Brent: $108.3)

Venezuela, in cooperation with a foreign oil company, started production at one of the world's top oil reserves - the gigantic Orinoco Belt. The goal for 2013 is to have a production of 15,000 bpd by the end of the year, and 5 times the production within a couple of years. In itself the goals and production of this specific project are not exactly a game changer; however, if more projects come online within the next couple of years, Venezuela will become an even more pivotal supplier in the global oil market. Total current country production is approximately 2.5 mbpd - a number that could rapidly increase when the potential of the Orinoco Belt is released.

Release: EIA oil data (Consensus)
Crude: 2,600,000 barrels (2,300,000)
Distillates: -2,000,000 barrels (100,000)
Gasoline: -3,600,000 barrels (-1,200,000)
Refinery utilization: -1.2%

Crude oil inventories have continued to build and are still at a seasonal multi-year high. The reverse is true for distillates, which are at seasonal multi-year lows. Gasoiline is more in line with the past year's levels. As refineries are still in maintenance, the lower processing of crude, in combination with the shale oil input, have crude levels increasing while no new processed products reach the inventories. Using the historical seasons as a guideline, we should soon see crude stock begin to drop, while product inventories increase again.

Recommendation:

Consumers are advised to establish partly hedges at current levels. Improving macro figures; two geopolitical wildcards (Venezuela and Iran) and accommodating central banks are all supportive for oil prices. Debt issues seem to be the only factor pulling in the other direction.