FX.co ★ US refiners suffer from Venezuela’s oil output crash

US refineries in the Gulf of Mexico have to pay more as a result of the decline in Venezuelan oil output.

According to Bloomberg, US production is at a record high level, while output in Mexico, despite a slight increase in January, is declining.

US crude’s typical premium to heavy Venezuelan oil fell to $0.31 cents a barrel, the lowest since October.

According to oil and refining analyst at Bloomberg Intelligence Fernando Valle, most US Gulf Coast refiners benefit from a situation when crude oil like that from Venezuela is at a large discount to WTI as this heavy crude comprises 40% to 60% of the oil they process.

Meanwhile, growing US production restrains an increase in WTI, while the ongoing decline in Venezuelan output supports the local benchmark.