March 5, 2013 / 5:55 AM / 5 years ago

UPDATE 9-Brent oil ends 5-day decline; China demand, Chavez support

* Venezuelan President Hugo Chavez dies

* Brent pipeline operator studies when to reopen

* China aims for 7.5 pct growth in 2013, same as 2012 target

* Shell declares force majeure on Nigeria Bonny Light supply (Add post-settlement gains in Brent following death of Chavez)

By Joshua Schneyer

NEW YORK, March 5 (Reuters) - Brent crude broke a five-day losing streak on Tuesday, rising by more than 1 percent toward $112 a barrel on optimism over Chinese oil demand, record-high U.S. equities and North Sea supply disruptions.

Oil prices extended their rise slightly in post-settlement trading after the announcement of Venezuelan President Hugo Chavez’s death, ending the socialist leader’s 14-year rule of the oil-rich South American country.

Brent crude futures rose $1.52 per barrel to settle at $111.61. The front-month contract for April delivery rose as high as $111.93 a barrel in post-settlement activity, following the announcement of Chavez’s death.

U.S. crude gained 70 cents a barrel to settle at $90.82, snapping a three-day losing streak.

Gains were limited by medium-term concerns such as rising U.S. crude supply and the country’s fiscal crisis, which have pushed oil prices about $8 a barrel lower since mid-February.

Commodity investors took encouragement from China’s vow on Tuesday to deliver economic growth this year of 7.5 percent and concentrate on boosting domestic consumption. The target is unchanged from 2012.

The statement from outgoing Premier Wen Jiabao countered concerns about demand in the world’s No. 2 oil market. Purchasing manager surveys over the weekend had suggested growth in China’s key manufacturing and service sectors may be slowing.

“China is targeting 7.5 percent growth and that could mean further economic stimulus there,” said Matt Smith at Summit Energy in Louisville, Kentucky.

Also lifting oil, Smith said, was the “euphoria” in equities markets on signs that a U.S. economic recovery is gaining steam.

The Dow Jones Industrial Average rose to a record high on Tuesday, breaking through levels last seen in 2007. The Dow has gained more than 8 percent this year.

So far, investors have shrugged off most concerns about $85 billion of automatic U.S. government spending cuts that came into effect on Friday, although the International Monetary Fund has estimated they could cut 0.5 percentage point from U.S. growth.

Weekly U.S. inventory data released by the American Petroleum Institute after the settlement showed a steep 5.6 million barrel build in domestic crude oil stockpiles for the week to March 1, including a 259,000 barrel build at the Cushing, Oklahoma, delivery point for the U.S. oil contract.

Product stockpiles fell slightly more than analysts’ expectations, however. Traders will now be watching for weekly stockpile data from the U.S. Energy Information Administration, due out on Wednesday, for further insight into inventories.

Markets were also awaiting U.S. nonfarm payrolls data due this week for further clues on the health of the U.S. economy and the future of the Federal Reserve’s monetary easing program, analysts said.

The head of the world’s largest crude-exporting company, CEO Khalid al-Falih of Saudi Aramco, said on Tuesday that global oil demand has recently “moderated”.


A North Sea pipeline closure has helped halt a downtrend that saw Brent sink in the previous session to $109.58, the lowest since Jan. 17.

The 80,000-barrels-per-day (bpd) Brent system was shut for the second time in seven weeks after oil and associated gas was found to have leaked into a leg of the 10,000-bpd Cormorant Alpha platform - offline since January.

In Nigeria, Royal Dutch Shell declared force majeure on its Bonny Light crude deliveries following a pipeline leak discovered on Sunday. It was not immediately clear how long it would take to repair the line.


U.S. crude 24-hour chart:

Brent crude 24-hour chart:

U.S. fiscal crisis at a glance:

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Additional reporting by David Sheppard in New York, Peg Mackey in London and Ramya Venugopal in Singapore; Editing by Peter Galloway, Dale Hudson and Bob Burgdorfer)

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