Venezuelan military rule of the state runs oil company PDVSA took an ugly turn after the Venezuelan military arrested two Chevron workers for what they say is graft and corruption. This comes as the American Petroleum Institute (API) reports a trifecta of draws in petroleum supply, and Morgan Stanly warning that U.S. refiners have had their fill of light shale condensate oil, something we have been warning about as well. Despite record U.S. shale production, U.S. refiners have too much light shale oil and that is failing to yield the type of products that are very much in demand. 

Major General Manuel Quevedo, the military leader that took over PDVSA last month toured a joint venture with U.S. major Chevron, according to Reuters and now is arresting their employees. Chevron Corp (CVX) said on Tuesday two of its executives were arrested. Reuters said that Venezuelan Sebin intelligence agents burst into the Petropiar joint venture’s office in the coastal city of Puerto La Cruz on Monday and arrested the two Venezuelan employees for alleged wrongdoing, a half-dozen sources with knowledge of the detentions told Reuters.

“Chevron Global Technology Services Company is aware that two of its Venezuelan-based employees have been arrested by local authorities,” Chevron said in a statement. “We have contacted the local authorities to understand the basis of the detention and to ensure the safety and well-being of these employees. Our legal team is evaluating the situation and working towards the timely release of these employees.” Venezuela’s Information Ministry and state-run company PDVSA did not respond to information requests about the detentions, which come amid a crackdown on alleged graft in the oil sector, according to Reuters.

This report comes days after reports of many oil workers quitting their jobs because of fear of working for the company that is under military rule. This is strange because I thought socialism was all about the worker toiling for the state in a worker’s paradise. Looks like there is trouble in paradise.

They are also in trouble in the shale patch. Morgan Stanley is the latest to warn that refiners have hit the shale wall. U.S. refiners were built for heavy crude and the light shale crude is too light and does not yield enough heavy product, like diesel for example. Pipelines have shut down as refiners have had their fill of shale.As I have said before that man or women for that matter cannot live by shale alone.

And even with record shale oil production, supplies are not rising like many thought they would. The American Petroleum Institute (API) reported that Crude supply fell by 1.047million barrels versus expectations of a 650,000 increase in supply. In Cushing, we saw a 1.015-million-barrel drop reversing the recent trend of rising Cushing supply. Products also took a hit as gasoline fell by 2.473 million barrels, a bullish shock and distillates down by 845,000 barrels.

Vladimir Putin is looking to cool tensions with the U.S. and told his legislature to stand down on sanctions on the U.S. Bloomberg reports that Russia’s leader wants to give President Donald Trump another chance to make good on pledges to improve ties and avoid escalation, according to four people familiar with the matter. One said that the Kremlin has ordered officials to curb their anti-U.S. rhetoric. What a sweetheart that Putin is.

Nat gas still riding the cold wave. The Softs markets have been smoking. Lumber, that pulled back from record highs looks to try it again as housing data was strong. Cocoa recently hit 18-month highs as storms in the Ivory coast damaged crops and Orange Juice is suddenly on a bullish run.