The International Swaps and Derivatives Association ruled Thursday that Venezuela, as well as state oil company Petróleos de Venezuela SA, defaulted on their debts. ISDA’s determination committee will reconvene on Nov. 20 to make a decision on how credit-default swaps, which can be used to protect against nonpayment, will be settled, according to a report from the Financial Times. “This is an evolving story,” said Phil Flynn, senior market analyst at Price Futures Group. “The default is clear and there is a real risk that this will lead to a dramatic drop in [Venezuelan] oil production that is well below 2 million barrels a day right now,” he said. “This should make it more difficult for refiners to get caught up on distillate supply that is well below normal in the U.S. and Mexico. Not great news at all and [this] will be another reason to not be bearish on crude.” December West Texas Intermediate crude CLZ7, +1.90% was at $55.26 a barrel in electronic trading, above the $55.14 Thursday settlement on the New York Mercantile Exchange.
Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
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