Soaring crude oil production in both Brazil and Canada represents a threat for Mexico and Venezuela
West Texas Intermediate Monday climbed 2 percent ending over USD 93, amidst severe cold weather northeast US, problems in Valero refinery and President Hugo Chávez's threats to halt oil sales to the United States if state oil giant Pdvsa's assets were actually frozen under a court order US oil major Exxon Mobil won against the Venezuelan holding.
At the end of trading Monday at the New York Mercantile Exchange, WTI spot price for March 2008 delivery raised USD 1.82, closing at USD 93.59. Fuel contracts for delivery in March 2008 climbed 4 cents to USD 2.39 per gallon.
The crude oil prices thus bounced back to the level recorded around 30 days ago, but it remained far from the unprecedented level of USD 100.09 last January 3.
Besides a severe wave of cold weather hitting northeastern US, where most of the heating oil market concentrates, and amidst outages at Delaware-based 180,000 bpd Valero refinery, traders were on the alert for the legal dispute involving Exxon Mobil and Pdvsa in connection with the nationalization by the Venezuelan government of Cerro Negro and La Ceiba projects -a move that forced the US company out of Venezuela.
The court orders freezing Pdvsa's assets in a number of countries led Chávez Sunday to reject Exxon Mobil as "white-collar thieves." The Venezuelan ruler said he instructed Minister of Energy and Petroleum to be on the alert for any move against Venezuela, adding that Venezuela would discontinue oil shipments to the "US empire."
Any worsening of Venezuela-US tensions usually has an immediate impact on oil prices in the New York exchange, as Venezuela is one of the largest crude oil suppliers to the US, with sales exceeding 1 million bpd.
"While Chávez has never followed through on his threats to stop oil deliveries to the US, his volatile personality and uncertainty surrounding his next moves may keep traders on guard," analyst John Kilduff told AFP.
A fainting role
Booming Canadian oil sands and Brazil's growing oil production may offset declines in other places in the Americas. This is good news for a country such as the United States, as it struggles to curb dependence on oil shipments from the Middle East and flickering suppliers.
Gains in huge oil reservoirs in Alberta and a number of oil findings offshore Brazil suggest a change in the hemisphere. "We have witnessed stability or decline in oil supplies from Mexico and Venezuela," said Greg Stringham, vice-president of the Canadian Association of Petroleum Producers.
"This actually means an opportunity for safe, reliable crude oil supplies from Canada to these markets," he added.
Oil production in the Americas may climb 150,000 bpd (0.7 percent) in 2008 to 21.57 million bpd. This represents a quarter of the world's estimated oil production, according to calculations made by Reuters based on a survey conducted among governments, investment banks, and research firms.
Oil production in Canada is likely to climb seven percent to some 3 million bpd, while output in Brazil is expected to reach 2.32 million bpd, an increase of 13 percent compared to 2007, including ethanol.
Translated by Maryflor Suárez R.