Venezuelan Showdown

Oil prices made it 6 days in a row of higher prices closing at the highest levels since last November on a widely cited article from the blogger ZeroHedge.

Oil prices started yesterday’s U.S. session in a soft correction mode on the Energy Information Administrations (EIA) Drilling Productivity Report, which reported that oil production from the seven major U.S. shale formations is expected to rise in March by 84,000 barrels a day. That would drive U.S. shale production to 8.4M million barrels per day, a new record.

Yet, a ZeroHedge report that read “Border Clash Imminent as Maduro Deploys Military to Borders to Block Aid” sent oil reversing sharply higher. There were some that cited a Reuters report that said Nigeria is willing to reduce oil output to help secure higher prices after Saudi Arabia called them out on cheating on production cuts, yet the rally was not really about Nigerian light oil, as much as it is about the heavy oil and the heavy situation in Venezuela.

You can really time the oil rally to the release of the ZeroHedge report. It read “Venezuela has shut a key maritime border and grounded flights as the Washington-backed coup-leader Juan Guaidó has said that foreign aid will enter Venezuela from neighboring countries by land and sea on Saturday.” It went on to say that “Maduro has rejected offers of foreign food and medicine, denying there are widespread shortages and accusing Guaidó of using aid to undermine his government in the U.S. orchestrated bid to oust him.”

So, in other words, don’t look at those starving and sick people over there and forget about that exploding inflation, everything here is groovy.        

They went on to report that “In comments broadcast on state TV, Defense Minister Vladimir Padrino said the opposition would have to pass over "our dead bodies" to impose a new government. Guaidó, who has invoked the constitution to assume an interim presidency, denounces Maduro as illegitimate and has received backing from some 50 countries. Padrino said it was unacceptable for the military to receive threats from Trump, and said officers and soldiers remained "obedient and subordinate" to Maduro. "They will never accept orders from any foreign government ... they will remain deployed and alert along the borders, as our commander in chief has ordered, to avoid any violations of our territory's integrity," Padrino said. "Those that attempt to be president here in Venezuela ... will have to pass over our dead bodies," he said, referring to what he called Guido’s efforts to create a "puppet government."

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