Latest Sign of Venezuela’s Oil Collapse Is 84% Surge in Supplies

Venezuelan crude inventories have surged 84% over the last three weeks as the threat of U.S. sanctions ward away buyers of the nation’s most important commodity. That raises the risk that state-run PDVSA will have to start shutting in production again, and is the latest sign that Venezuela’s oil industry is on the verge of collapse. The port of Jose, the main gateway of the country’s oil exports, has been empty for a week as importers of Venezuelan crude including India’s Reliance Industries Ltd, Spain’s Repsol SA and Italy’s Eni SpA skipped oil purchases this month, according to internal reports seen by Bloomberg. The three companies last month took a combined 9.7 million barrels, accounting for more than half of September’s exports.

Oil stored at the Jose terminal and nearby facilities known as upgraders almost doubled to 10.6 million barrels since the end of September, reversing a 3-month decline. At these levels inventories are dangerously close to volumes that in the past have prompted the state oil company Petroleos de Venezuela SA to shut-in wells because it didn’t have anywhere else to store its crude.

Glut

Inventories of Venezuelan oil swell in October

Source: PDVSA reports compiled by Bloomberg; inventories at the port of Jose and oil upgraders

The Trump administration is zeroing in on the diesel swaps because it’s running out of options to pressure the regime of President Nicolas Maduro. Just last month, an influential Trump administration official secretly met with a representative of Nicolas Maduro’s regime in Mexico City to try to negotiate the Venezuelan leader’s peaceful exit from power.

View full article at www.bloomberg.com