US Weekly Oil Summary: Venezuela Sanction Easing a Boost for US Refiners

The loosening of sanctions on Venezuela’s oil industry will be a boost to US refiners, well-equipped to process its heavy crude, according to Bloomberg.

• US refiners with high Nelson Company Indexes – more sophisticated and complex refineries with additional conversion units – can buy discounted barrels and extract higher value products from heavier crudes.
• About 250,000 bpd of Venezuelan crude, currently going to Asia could be diverted to the US Gulf following last week’s sanctions easing according to Valero’s COO Gary Simmons Thursday.
• Chevron aims to raise its production in Venezuela to 150,000 bpd by the end of the year – 15% above current levels according to company CFO Pierre Breber.
• Stocks at Cushing stood at 21.226mbbls as of 20 October. Tank storages were close to falling to the operational low of below 20mbbl in recent weeks.
• US total rig count rose by one in the week to 625, according to Baker Hughes Oct. 27. This is the highest since Sep. 22.
• US refiner Valero said in its Q3 earnings call that it expects strong diesel cracks for this winter. Regarding diesel exports in Q3, 70% went to Latin America. Valero Energy plans to operate its 14 oil refineries in North America and the UK at up to 96.5% in Q4. They have a combined capacity of 3.2million bpd.
• Chevron earlier agreed a deal for US producer Hess in a $53bn all-stock transaction it said today in a move for US onshore, Gulf of Mexico and Guyana assets.
• USD: Some weakness for the equities approaching the weekend close as sentiment is dampened surrounding any potential discussions of a HAMAS- Israel ceasefires. Fresh lows for e-minis produces a moderate greenback bid, which sees the likes of EURUSD and GBPUSD roughly 30 pips off the earlier highs. Some notable divergence between notorious safe havens on Friday sees CHFJPY extend declines on the session to over 1%, which eats into a healthy portion of the October rally.
• Real GDP came in stronger than expected in the Q3 advance release at 4.88% annualized, somewhere between consensus at 4.5 and the Atlanta Fed GDPNow at 5.4, after the 2.06% annualized in Q2.
• The 5&P Global composite PMI surprisingly increased to 51.0 (cons 50.0) from 50.2 in the preliminary October report.
• US Jobless claims were up 10k to 210k in the week to Oct. 21, while previous jobless claims for the week to Oct. 14 were revised to 200k.
• New home sales accelerated to a much-stronger-than-expected 759k in September (vs 680k expected and 676k prior revised), for the highest sales figure since Feb 2022.