Forty two years to the day after Erno Rubik invented the Rubik’s cube, and the oil market is looking puzzled. As the fear of a potentially hugely huge 0.25% U.S. interest rate hike in June reverberates around the world, a firming US dollar has greased the wheels for an oil sell-off today. Hark, here are five things to consider in the oil market:
1) Venezuela is offering its crude at its biggest discount since 2008 as it scrambles for revenue and battles for market share. The discount of a basket of Venezuelan oil versus WTI is now more than $12/bbl, and is averaging a discount of $8.44/bbl so far this year. While Venezuela’s heavier crude should be at a discount to WTI’s higher quality, light sweet crude, the discount of $3.78/bbl in 2015 and $3.73/bbl in 2014 seems closer to fair value than the current discount.
2) Following on from this point we can see in our ClipperData that Venezuelan crude loadings were down