Price of oil unaffected by the death of Hugo Chavez

The oil markets were calm after the death of Venezuelan president, Hugo Chavez, was announced. Analysts are saying the market may only react after the announcement of the country's new leader. Moreover, the market has enough oil to meet demand, which affects the dynamics of price. Whereas in yesterday's first half, the price of oil saw insignificant drops, in the second, the decline became more obvious, as the American Oil Institute announced that crude inventories in the US increased last week (+3.83 million barrels, to 381.4 million barrels).

The price of West Texas Intermediate oil with April delivery fell 1.10 dollars (1.2%) at 10:39, on the New York Mercantile Exchange, reaching 89.68 dollars/barrel. The day before, a few hours after the death of Chavez, the price of oil had gained 70 cents, ending the day at 90.82 dollar barrel.

At the ICE Futures Europe of London, the price of Brent oil with April delivery fell 0.9%, to 110.63 dollars/barrel. On the previous day, price had risen 1.52 dollars, to 111.61 dollars/barrel.

Hugo Chavez died on March 5th, after struggling with cancer for two years, and 14 years as the president of Venezuela. The death of Chavez was announced by vice-president Nicolas Maduro, who said: "We need to be more united than ever now. No violence, no hate!".

The government in Caracas has decreed seven days of national mourning by closing down all the schools and universities until March 11th. After the death of Chavez, who was reelected in October last year, elections will be held 30 days from now.

"The problems in Venezuela will undoubtedly have an impact on the oil market, but that impact may be small enough that it will not pose any problems", Ric Spooner, chief-analyst at CMC Markets of Sydney said, quoted by the international press. "The oil market has a sufficient supply, and prices are still high compared to the balance between demand and supply".

In February, Venezuela produced 2.86 million barrels of oil per day, below the amount produced by Saudi Arabia, Iraq and Kuwait - which are also members of the OPEC. Venezuela has exported about 1 million barrels of crude oil per day to the US in December 2012, according to official data from Washington.

Hugo Chavez has frequently criticized the United States, even though Venezuela depends on the US for the revenues from the sale of oil. Exports of oil to the US fell to 49 million barrels the moment when Chavez became president of the country, to 31.9 million barrels in February 2011. "Citgo Petroleum" Corp., a Venezuelan oil company headquartered in the US, operates three refineries in Texas, Louisiana and Illinois, and sells fuel through thousands of gas stations.

Oil accounts for 95% of the revenues which Venezuela makes from its exports.