US gasoline glut hits new record, crude stocks up

OPEC, together with non-members such as Russia, Kazakhstan and Oman, agreed in December to cut crude output this year by 1.2 million bpd to avoid a build-up in unused inventories, particularly if the global economic outlook darkened. Inflation is projected to reach a stunning 10 million percent in 2019.

But McMonigle, now senior energy policy analyst at Hedgeye Potomac Research, believes Trump is very likely to impose sanctions.

Guaido is considering naming a board to state-run PDVSA's USA subsidiary, Citgo Petroleum, in a gambit to generate revenue for the opposition.

The International Energy Agency said in September that the global oil supply reached 100 million barrels a day for the first time ever in August, boosted by rising production in the USA and several OPEC nations.

Any disruption in Venezuelan supplies also is likely to increase demand for heavy-sour crudes - the dense, viscous and relatively more sulfurous varieties that the Latin American nation produces.

The drop in oil price production, the near-depletion of foreign reserves as a result of trying to support a falling currency, and the expected 18% contraction in the economy over the course of the previous year due to the fact that foreign companies have been fleeing the country as a result of corruption, have taken their toll. It is frequently blended with lighter crudes to give refiners higher-value products.

"Forcing Venezuela into the spot market to dump prompt crude puts them in a corner".

Prices on Tuesday came under pressure after a warning for 2019 global growth from the International Monetary Fund and weak economic data out of China, which underlined concerns about global economic growth and energy demand. The only countries that sent more crude to the United States were Canada, Saudi Arabia and Mexico.

Refineries along the Gulf Coast are set up to process heavy crude and they may end up spending more money buying it elsewhere.

The biggest United States importers of Venezuelan crude past year were Citgo, Valero and Chevron, according to Rystad Energy.

US refiners "will need to hustle to secure alternate foreign crude oil supplies to replace short-haul Venezuelan heavy sour with Mexico and the Middle East such as Iraq and Saudi Arabia being the most logical replacements", said John Driscoll, the chief strategist at JTD Energy Services Pte Ltd.

Chevron, which has operations in Venezuela, declined to comment on the situation there.

A possible move by President Donald Trump to hurt Venezuela's oil industry could prove a shot in the arm for the Xi Jinping and Narendra Modi administrations. Even inthe event of a total collapse of production the effect will mostly be psychological, as Venezuela now accounts for, at best, about 1.3% of the world's total crude oil. It became subject to USA sanctions again in November after Trump quit a nuclear accord with the Islamic Republic. If this support fails then look for the selling to continue into $56.65.

Longer term, however, there are even more questions.

"The road back for Venezuela will be extremely arduous given the depths of the economic and humanitarian disaster", she said.