Venezuelan recovery

ICE Brent front-month continued to trade above 81 $/b, despite improving supply conditions in Kazakhstan and Lybia. Both countries are ramping up their crude production and should be back to their nominal output by the end of January if there are no additional disruptions. Following the Saudis, Kuwait has also cut its OSPs by close to 1$/b compared to the previous month, establishing its crude at 1.8 $/b above the Oman/Dubai benchmark. This continues to highlight the concerns from middle eastern producers that Asian crude buying could be weak during February, the peak of the Chinese maintenance season. 

Finally, Venezuelan crude production and refining runs are discretely ramping up, after years in disarray. Crude production recently reached 1 mb/d according to PDVSA, while refineries are now able to refine about 160 kb/d of gasoline nationwide. Compared to previous years, where Venezuela – under US sanctions – had to barter crude for refined products with China and Iran, the situation has now improved.