Stock market today: Dow, S&P 500, Nasdaq diverge as jobs data, Trump's Venezuela oil deal take focus

Oil prices fell in morning trading on Wednesday after Energy Secretary Chris Wright said the US will take over the sale of Venezuelan crude oil to the open market.

Futures on West Texas Intermediate crude (CL=F), the US pricing benchmark, plunged by more than 1.6% to trade below $59.40 on the news. Futures on Brent crude (BZ=F), the international benchmark, fell by a tighter 0.8%, trading below $60.30.

“We are going to market the crude coming out of Venezuela, first this backed up stored oil, and then infinitely going forward, we will sell the production that comes out of Venezuela into the marketplace,” Wright said Monday at a conference hosted by Goldman Sachs in Miami.

Wright noted that this includes both oil currently stored in Venezuela and in barrels located on floating storage on the water.

Wright also said that the US will supply the needed diluent chemicals, such as naphtha, that are necessary to liquify Venezuela’s heavy crude oil in order to transport it via pipelines. It is unclear whether he was referring to the US government itself or oil companies that produce naphtha as a byproduct of their drilling activity.

Since the US government’s capture and extraction of Venezuelan President Nicolás Maduro over the weekend, President Trump has made several comments about his intent to reopen the floodgates on Venezuelan crude oil, largely shut off from the market since the country’s oil industry was nationalized in the early 2000s under Hugo Chavez.

The president’s statements have included remarks that the US oil industry will spend “billions” of dollars to rebuild infrastructure that has largely been left to crumble for two decades. But to return Venezuela to its production highs of the early 2000s of around 3 million barrels per day would likely take around $180 billion in extra funding between now and 2040, according to energy intelligence firm Rystad Energy.

Rystad estimates that international investors and operators would need to commit at least $30 billion to $35 billion of that capital within the next two to three years, and that more than $50 billion of investment would be needed over the next 15 years just to maintain Venezuela’s current output.

The leaders of US majors Chevron (CVX), the only US company that has maintained operations in Venezuela since nationalization; ExxonMobil; and ConocoPhillips are expected to meet with the President on Friday to discuss potentially reentering Venezuela. However, it remains unclear whether those companies would be eager to quickly jump back into a politically tenuous environment where payoff is likely to be years down the line.