Seeking cash, Venezuela's Chavez looks to sell Citgo

President Hugo Chavez is promising to build new public housing complexes, boost social programs and renovate the long neglected Caracas subway, and he needs money. The ambitious plans will squeeze Venezuela's coffers at a time when oil earnings have slipped and Chavez is sending his foreign allies generous amounts of crude on credit. So he has raised a possibility that once seemed remote: selling off Venezuela's U.S. based oil company, Citgo Petroleum Corp.

For Chavez, it's an idea driven both by hard money realities and by politics. Getting rid of the company and its refineries in the U.S. would give Chavez billions of dollars for domestic spending as he approaches his 2012 re-election bid and seeks to remedy problems including an acute shortage of affordable housing. A sale would also fit with the leftist leader's interest in distancing Venezuela from the U.S. while building stronger ties with allies such as Russia, China and Iran.

Citgo has delivered oil to Venezuela's No. 1 client for two decades, but judging by Chavez's complaints about Citgo not turning a profit, he seems more than ready to sell it, if a buyer can be found. "Citgo is a bad business, and we haven't been able to get out of it," Chavez said in a televised speech late last month. He ordered his oil minister, Rafael Ramirez, to look at options for selling off the state oil company's assets in the United States.

Chavez says the Houston based company could be worth at least $10 billion, but analysts say it would likely fetch much less, perhaps half that, and it might be hard to find a buyer in a difficult economic climate.......Read the entire article.


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Venezuelan Black Sea Oil Route Threatens European Supplies

Deliveries of Venezuelan crude to Belarus from the Black Sea may pose a threat to Russian oil supplies bound for central Europe, Russia’s pipeline operator OAO Transneft said. Transneft is preparing a letter to the European Union explaining the situation, Igor Dyomin, a Transneft spokesman, said by telephone in Moscow. “The decision has increased risks to Russian oil deliveries to Europe,” he said.

Belarus reversed the direction of one line in the Druzhba link’s southern branch on Nov. 21 to carry crude east to the Mozyr refinery, Dyomin said. The branch’s parallel line continues to carry Russian oil west to the Czech Republic, Croatia, Slovakia, Hungary and Germany, he said.
Russia and Belarus, which are developing a customs union with Kazakhstan, have clashed over oil export taxes as Russia moved to roll back a discount that allowed Belarus to benefit from cheap oil supplies. Russian Prime Minister Vladimir Putin said the duty may be canceled once a free-trade area is created.

Belarus plans to take delivery of as much as 9 million metric tons of crude from Venezuela next year, a Belarusian presidential administration official said in September. Belarus’s use of the line means Transneft won’t be able to increase deliveries via Druzhba’s southern branch to meet additional winter demand and won’t have an alternative route in case of an accident, Dyomin said.

Transneft supplies to Europe have continued uninterrupted through the second line of Druzhba, which is operating at slightly more than its capacity of 17.5 million tons a year, Dyomin said. The crude Belarus received was Russian oil that Venezuela obtained via a swap at the Black Sea port of Novorossiysk, Dyomin said. The 80,000 ton cargo was carried from the Black Sea to Belarus via Ukraine’s Odessa-Brody pipeline, Dyomin said. The next delivery, of 78,200 tons of oil, is scheduled to arrive at the Odessa port on Nov. 25, Kommersant-Ukraine said yesterday.

“Why Belarus can’t take that same oil via Druzhba is beyond my understanding,” Dyomin said.


Posted courtesy of Bloomberg News. Reporter Stephen Bierman can be contacted in Moscow at sbierman1@bloomberg.net.



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Crude Oil Closes Higher On Improved Demand Outlook, Better Than Expected Employment Numbers

June crude oil closed higher on Friday as it extends the rally off April's low. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If June extends the rally, January's high crossing at 59.66 is the next upside target. Closes below the 20 day moving average crossing at 52.20 are needed to confirm that a short term top has been posted.

First resistance is today's high crossing at 58.67.
Second resistance is January's high crossing at 59.66.

First support is the 10 day moving average crossing at 53.50.
Second support is the 20 day moving average crossing at 52.20.

Today’s Stock Market Club Trading Triangles

The June Dollar closed sharply lower on Friday and below March's low crossing at 83.14. The low range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are oversold but remain bearish signaling that sideways to lower prices are possible near-term.

If June extends the decline, the 87% retracement level of the December-March rally crossing at 81.49 is the next downside target. Multiple closes above the 20 day moving average crossing at 85.13 are needed to confirm that a short term low has been posted.

First resistance is the 10 day moving average crossing at 84.47.
Second resistance is the 20 day moving average crossing at 85.13.

First support is today's low crossing at 82.76.
Second support is the 87% retracement level crossing at 81.49.

Today’s Stock Market Club Trading Triangles

The June S&P 500 index closed higher on Friday as it extends this spring's rally. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term.

If June extends the rally off March's low, January's high crossing at 937.00 is the next upside target. Closes below the 20 day moving average crossing at 869.08 are needed to confirm that a short term top has been posted.

First resistance is Thursday's high crossing at 929.00.
Second resistance is January's high crossing at 937.00.

First support is the 10 day moving average crossing at 887.79.
Second support is the 20 day moving average crossing at 869.08.


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Oil Rises On Positive Unemployment Numbers, Venezuela Seizes 60 Oilfield Service Company Assets

"Oil Rises to Highest Since November as U.S. Job Losses Slow"
Crude oil rose to the highest level since November after a report showed that the U.S. cut fewer jobs than forecast in April, a signal that the worst of the recession has passed and fuel demand may rebound. Oil prices gained 10 percent this week as reports on U.S. home sales and manufacturing in China boosted optimism about the economy and after U.S. crude oil supplies climbed less than forecast. Payrolls fell by 539,000, after a 699,000 loss in March.....Complete Story

"Crude Settles at Fresh Six Month High"
Crude oil futures prices jumped Friday to a fresh six-month high after the latest U.S. employment data showed the economic crisis may be bottoming out. Nymex light sweet crude oil for June delivery settled up $1.92 a barrel, or 3.4%, at $58.63, the highest level since Nov. 11. Crude futures gained in seven of the past eight sessions, rising 17.4%, or $8.71, since April 28. ICE June North Sea Brent crude settled up 2.96%, or $1.67, at $58.14 a barrel.....Complete Story

"Venezuela Seizes 60 Oilfield Service Company Assets"
Venezuelan President Hugo Chavez seized assets from 60 oilfield services companies including Oklahoma-based Williams Cos., using a law the national assembly passed yesterday. Employees at state oil company Petroleos de Venezuela SA worked through the night to take over operations from companies that provided services such as water and gas compression and maritime support, Chavez said. Venezuela’s benchmark government bonds fell the most in 2 1/2 months. “Today, the private services companies disappear.....Complete Story


Today’s Stock Market Club Trading Triangles

Crude Oil Industry Headline News

"Crude Oil Falls Below $34 a Barrel After OPEC Reduces 2009 Demand Forecast"
Crude oil fell below $34 a barrel to a four-week low after OPEC said that demand for its crude will decline 4.2 percent this year as the recession curbs fuel use....Complete Story

"Obama May Bar Offshore Drilling in Some Areas, Interior Pick Salazar Says" President-elect Barack Obama may ban offshore oil and gas drilling in some areas of the Outer Continental Shelf, according to Ken Salazar, Obama’s choice for secretary of the Interior Department....Complete Story

"Iraq Invites IOCs to Workshop on Oil Deals"
The Iraqi oil ministry will hold a workshop in Istanbul on Feb. 12-14 for international oil companies interested in bidding for the country's first licensing round to develop one of the world's largest oil and gas fields....Complete Story

"Chavez Reaching Across Ideologies for Oil, Looks to West for Help"
Venezuelan President Hugo Chavez is inviting Western oil companies to submit bids to develop new areas of the Orinoco Belt for petroleum production....Complete Story

"With Oil Use Off, Market Yawns at OPEC Talk"
Saudi Arabia, the world's largest oil exporter, said it plans to cut output next month to below its OPEC-assigned quota. Even so, oil markets essentially yawned and continued to move lower....Complete Story

"China, Iran Oilfield Cooperation to Help Stabilize Market"
Joint commercial oilfield development by China and Iran would help stabilize the oil market, China's Foreign Ministry spokeswoman Jiang Yu said here Thursday. Iran and China signed a US $1.76 billion deal....Complete Story