Oil prices had a choppy session yesterday with the market trying to digest the impact of the arrest of President Nicolas Maduro by the US. ICE Brent fell below US$60/bbl at one point during the trading session but settled 1.66% higher on the day at US$61.76/bbl, ING's commodity experts Ewa Manthey and Warren Patterson note.

Venezuelan supply risk pressures heavy Crude differentials

"Developments over the weekend pose further downside risk to Venezuelan Oil supply in the short term – and leave the potential for upside in the longer term. This would require significant investment in the domestic energy sector, which foreign companies may be reluctant to undertake unless there is a more attractive investment environment or some form of guarantee for investors."

"The potential for an increase in Venezuelan heavy Crude Oil supply is weighing on the West Canada Select differential, which fell to its lowest level since August yesterday. An increase in Venezuelan supply would likely result in larger flows to US Gulf Coast refiners. This would weigh on US demand for heavy Crude from Canada."

"Meanwhile, amid an Oil market surplus, Saudi Arabia cut its official selling price (OSP) for all grades and regions for February loadings. Aramco’s flagship Arab light into Asia was cut by US$0.30/bbl MoM to US$0.30/bbl, which is the third straight month of cuts. It leaves the OSP at its lowest level since January 2021."