Buy the rumor and sell the fact. Many traders thought the run-up on oil was based only on the potential of an attack on Syria and fears that it spins out of control. Yet, the run-up in oil has been about a lot more than just Syria, but about falling supply, rising demand and other geopolitical risk factors. Oil is already shaking off the “sell the fact” trade after the successful attack on Syria’s alleged chemical weapons sites and now focuses on other supply risks and generally strong global demand. Oil is finding support on private reports that we may see a drop in U.S. crude supply led by a drop in the NYMEX delivery hub of Cushing Oklahoma.

Private forecaster Genscape reported that crude supply in Cushing Oklahoma fell by 1.23 million barrels. Matthew Epstein. of COWEN Research also reported a substantial draw at 769,663 Barrels. This reverses the recent trend of builds as this increases the odds of a large drop in overall U.S. crude supply.

We also must consider the impact of the total collapse of the Venezuelan oil industry. “The Independent” reported that “Despite having the greatest oil reserves in the world, Venezuela’s government is being forced to spend millions of dollars a day importing crude to prop up its ailing industry.”

They write that “the speed of decline in production has been vertiginous, with output falling by 100,000 barrels a day in February, according to Bloomberg. The Central University of Venezuela says production is reaching its lowest point in 70 years. Most of the enormous oil reserves Venezuela has access to – almost 25 per cent of all the oil controlled by the world’s biggest producers – is heavy crude and needs to be diluted with lighter oil to become a commercially viable product.”

Reuters is reporting that under military rule, Venezuela oil workers quit in a stampede. The leader  Major General Manuel Quevedo, last month toured a joint venture with U.S. major Chevron, but now is speeding the total breakdown of the Venezuelan oil industry