Brent crude was little changed near its highest in four days as a North Sea pipeline system remained shut on the day that Venezuela, OPEC’s fourth-biggest producer, announced the death of President Hugo Chavez.
Futures fluctuated, having climbed by the most in a month Tuesday. Venezuelan Vice President Nicolas Maduro said on state television that Chavez died at 4:25 p.m. at a military hospital in Caracas. The Brent pipeline system has been shut since an oil leak was discovered March 2 on the Cormorant Alpha platform. U.S. crude stockpiles rose 5.6 million barrels last week, data from the American Petroleum Institute showed.
“There’s still positive sentiment, risk appetite is still high,” said Filip Petersson, a commodities strategist at Stockholm-based bank SEB AB, who estimates that a fair value for Brent would be $105 a barrel. “There’s plenty of crude out there at the moment.”
Brent for April settlement was at $111.40 a barrel, down 22 cents, on the London-based ICE Futures Europe exchange at 12:20 p.m. in London after advancing as high as $112.23. The volume of all futures traded was 68 percent above the 100-day average. Prices gained $1.52, or 1.4 percent, to $111.61 Tuesday, the highest level since Feb. 27 and biggest increase since Feb. 8. The European benchmark grade’s premium to WTI futures was little changed at $20.63.
WTI for April delivery was at $90.64 a barrel, down 18 cents, in electronic trading on the New York Mercantile Exchange. The volume of all futures traded was 38 percent below the 100-day average.
Production from the 27 North Sea oil fields that make up the Brent system was shut because of the platform leak, an official from Abu Dhabi National Energy Co. PJSC, the operator known as Taqa, said March 4. Taqa had no estimate for when the flow will resume, said the official, who asked not to be identified because of company policy.
The pipeline normally carries 90,000 barrels of oil a day, equivalent to 10 percent of U.K. output, though 10,000 barrels a day was already offline following a similar incident at the same platform on Jan. 14.
Output from the North Sea Buzzard oil field is increasing after scheduled maintenance was completed Tuesday ahead of plan, according to the platform’s operator, Nexen Inc. The 200,000 barrel-a-day field was scheduled to have four days of work in the first week of March.
The price for Venezuela’s crude basket has surged more than 11-fold to $103.89 a barrel currently, from about $9 when Chavez took office in 1999. He used the revenues to pour money into social programs, helping to cut the poverty rate by half.
“It’s too soon to say what Hugo Chavez’s death means for oil prices, but it is certainly true that oil prices are what made Hugo Chavez possible,” Daniel Yergin, the chairman of IHS Cambridge Energy Research Associates, said in an email. Falling oil prices paved the way for Chavez to rise to power and increasing prices gave him the money needed to sustain state spending and consolidate power, Yergin said.
Venezuela produced 2.86 million barrels of oil a day last month, behind Saudi Arabia, Iraq and Kuwait in the 12-member Organization of Petroleum Exporting Countries, according to a Bloomberg survey. It exported about 1 million barrels a day to the U.S. in December, figures from the U.S. Energy Information Administration show.
“The death of Hugo Chavez may have an impact on the market, although that isn’t apparent at the moment,” said Michael McCarthy, a chief market strategist at CMC Markets in Sydney. “The potential for disruption in Venezuelan politics could see disruptions to development and supply.”
U.S. crude supplies increased last week the most since May, the API data showed. Stockpiles at Cushing, Oklahoma, the delivery point for WTI, gained 259,000 barrels to 50.8 million, the highest level in a month. An EIA report Wednesday may show total U.S. crude inventories gained by 788,000 barrels, climbing for a seventh week, according to the median estimate of 12 analysts in a Bloomberg News survey.
Gasoline supplies dropped 914,000 barrels last week, the API data show. They are projected to fall 1 million barrels in the EIA report. Distillate inventories, a category that includes heating oil and diesel, slipped 1.7 million barrels, compared with a projected 1 million barrel decline in the survey.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the EIA for its weekly survey. The Energy Department’s statistics unit is scheduled to release its report at 10:30 a.m. in Washington.
WTI has technical support along its lower Bollinger Band, about $90.24 a barrel Wednesday, according to data compiled by Bloomberg. Futures Tuesday traded below the indicator before rebounding to settle higher, signaling chart support, where buy orders may be clustered.