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06/03/2013 07:51:12 AM
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Publish Date06/03/2013 07:22:45 AM
Last Update06/03/2013 08:34:50 AM
Crude oil jumped Wednesday above the $91.00 a barrel level after Hugo Chavez lost his battle with cancer, stronger growth outlook that may revive demand on oil and as North Sea pipeline system stays shut.
The Venezuelan leader Hugo Chavez lost his battle with cancer on Tuesday and died at the age of 58 after leading the oil-rich nation for more than 14 years. Soon after, vice-president Nicolas Maduro was named Venezuela’s leader until new elections are held in 30 days.
Uncertainty arose from the fact that Maduro taking the helm in the interim appeared to contradict the constitution that says the National Assembly president, currently Diosdado Cabello, should take over the presidency.
This might create tensions between the leading party and opposition who calls for Cabello to take the helm. Meanwhile, the U.S. President Barak Obama said this is a chance to build a constructive relationship between the two countries and open a “new chapter”.
Although Chavez’s death is not expected to have a major impact on the oil market while the country`s oil industry was operating normally and no disruption are expected, investors are “on the look-out for a succession plan in the OPEC nation”.
- Crude is trading as of this writing around the $91.02 a barrel level compared with the opening at $90.81, while the highest is at $91.14 and the lowest is at $90.63
Oil prices are also rising following positive signs from the United States and China, the world`s top oil consumers, improving the outlook for demand on oil and giving risk appetite a further boost, this pushed the USD lower against a basket or currencies.
The Dow Jones closed at a record high on Tuesday after the U.S. services sector grew last month at its fastest pace in a year while China`s government pledged to boost spending in 2013 to ensure an economic growth of 7.5%, lifting hopes of a global economic recovery.
Meanwhile, Brent also finds support from worries over supply disruptions. The North Sea Brent pipeline system stays shut after a platform leak and there is no estimate date for when it will resume pumping oil.
- Brent is trading as of this writing around the $ 111.91 a barrel after rising 0.27%
Yet caution persists as investors are watching the U.S. fiscal crisis and Italy`s political stalemate which could cap gains on the medium-term. Markets are also awaiting the ECB and BoE monetary policy decisions on Thursday and the U.S. jobs report on Friday.
The API report yesterday showed that U.S. crude supplies increased last week the most since May by 5.6 million barrels. Now traders are watching for the U.S. Energy Information Administration report later today that may show inventories rose 788,000 barrels.
- Natural gas is trading as of this writing at $ 3.543 per 1,000 cubic feet after rising 0.40%
- Heating oil is trading at $ 2.995 a gallon after rising 0.74%
- Gasoline is trading as of this writing at $ 3.1514 a gallon after rising 0.10%
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