Venezuelan Oil Exports to US Still Primary Source of Cash

Weighing on oil futures, US crude inventories sharply rose by 8 million barrels last week, the Energy Information Administration said Thursday, vs. forecasts of a 42,000-barrel decline.

"Military support for Maduro is likely to tip the balance of power in his favor, despite worldwide support for Guiado", said Jasper Lawler, head of research for London Capital Group, in a note.

U.S. West Texas Intermediate (WTI) crude futures were at $52.40 per barrel, 22 cents lower from their last settlement.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said USA crude inventories rose by 5.4 million barrels in the week to November 30, to 448 million barrels, in a sign that us oil markets are in a growing glut. Any slowdown in Venezuela would come atop supply cuts orchestrated by OPEC and Russian Federation this year to boost crude prices.

Nicolas Maduro, the country's Leader since 2013, responded by breaking relations with the U.S. Even without such measures, Venezuelan production is expected to continue to fall as debt-burdened PDVSA is unable to reinvest in its oil fields or infrastructure and has lost many of its most experienced technical staff under its military management. Trump said Gaido has the support of the United States.

“The oil market is partially pricing in the risk to Venezuela's crude production, which has been plummeting in recent years, ” Vandana Hari of Vanda Insights said.

The Energy Information Administration now estimates output will top out at 14.53 million bpd in 2031, according to its Annual Energy Outlook released Thursday. That was contrary to expectations for a fall of 600,000 barrels expected by analysts polled by S&P Global Platts, but the American Petroleum Institute on Wednesday had reported a climb of 6.6 million barrels.

Crude oil had a volatile week as prices ranged between $51.80 and $54.20 before settling at $53.55, down about 0.2 percent.

Gasoline inventories also rose by 4.05 million barrels versus a forecast for a build of 2.66 million barrels.

Venezuela's crude production has declined steadily since former Socialist president Hugo Chavez won power in 1999, and has fallen by half over the past decade to 1.2 million barrels a day (b/d).

Global oil markets are still well supplied, however, thanks in part to surging output in the U.S. The report also said that US will become a net energy exporter by 2020 as USA crude production increases and domestic consumption of petroleum products decreases. The EIA reported Thursday that domestic supplies of natural gas fell by 163 billion cubic feet for the week ended January 18.