Americas News
Oil Dips As Glut-Obsessed Analysts Continue To Ignore Venezuela Tumult
Same old, same old seemed to be the mantra of crude traders on Tuesday as they carried over their main 2025 concern – global oversupply eclipsing demand – and caused a dip in oil prices, while tumult in Venezuela was given short shrift.
Tamas Varga, an analyst at PVM Oil, said, "It is premature to evaluate the impact of Nicolas Maduro's capture on the oil balance; what seems obvious, nonetheless, is that oil supply will be sufficient in 2026, with or without an increase in production from the OPEC member."
As of 1839 GMT on Tuesday, Brent fell 69 cents to $61.07 per barrel, and West Texas Intermediate declined 79 cents to $57.53 per barrel.
Morgan Stanley analysts were quick to stoke bearish sentiment on Tuesday by noting that both supply from the Organization of the Petroleum Exporting Countries and non-OPEC supply would "enter 2026 at a very strong level" and cause a global surplus in the first half of as much as 3 million barrels per day (bpd).
Meanwhile, despite U.S. president Donald Trump's claim that Washington will preside over reviving Venezuela's oil industry, analysts such as Rob Thummel, senior portfolio manager at Tortoise Capital, stated that "it would be unlikely in the near term" that U.S. oil and gas producers will begin investing in Venezuela.
He added, "U.S. and international operators are likely to wait for political clarity and stability before committing the millions or billions of dollars required to rebuild Venezuela's oil industry."
Still, pundits pondered short-term impacts of Venezuela president Nicolas Madura's ouster from office, one of them outlined by Andrew Meleney, portfolio manager at Infrastructure Capital Management; he wrote, "since the crude oil from Venezuela is heavy, it does not act as a direct replacement for the light barrels coming from most domestic shale basins…..the access to cheaper heavy crude should improve U.S. refinery economics, which will support refinery runs and midstream barrels getting to the Gulf Coast."
Meleney went on to speculate that the most immediate impact could be that Canadian barrels required to meet Gulf Coast heavy crude runs are displaced.
In other oil news on Monday, the first count of the year for U.S. crude stockpiles saw a 2.8 million barrel dip in crude for the week ending January 2, according to the American Petroleum Institute; however, gasoline inventories saw a large increase of 4.4 million barrels during the same time frame.
