By early afternoon in Europe, benchmark oil for April delivery was down 10 cents to $90.72 a barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract rose 70 cents to finish at $90.82 a barrel on the Nymex, just hours after Chavez died.
Chavez, who died Tuesday after a two-year battle with cancer, oversaw a decline in oil production during his 14 years as the leader of Venezuela, and analysts don't expect that trend to change immediately. The full impact of his death may not be felt until Venezuela, which sits on the world's second-largest oil reserves, picks a new leader — one who might choose a course different from Chavez. Elections are expected to be called within a month.
"While Chávez was in office, the Venezuelan oil industry was largely nationalized and foreign companies were driven out of the country, which led to a shortage of investment and to stagnating oil production," said a report from analysts at Commerzbank in Frankfurt. "A more investor-friendly environment in Venezuela would thus significantly improve the supply prospects on the oil market. Long-term, this could give rise to a dampening effect on oil prices."
By 2011 the country's output had dropped to 2.5 million barrels a day from 3.5 million barrels per day in 2000, according the Energy Department, and exports had fallen to 1.7 million barrels a day. Oil accounts for 95 percent of Venezuela's export earnings.
Chavez increasingly turned against the United States, although he continued to depend on the U.S. for oil revenue. Oil shipments to the U.S. declined from 49 million barrels a month when Chavez took office, to 31.9 million barrels in February 2011.
This week, oil traders will be monitoring fresh information on U.S. supplies of crude and refined products and the latest government data on hiring. The Labor Department will release employment data for February on Friday.
Brent crude, used to price many kinds of oil imported by U.S. refineries, was down 16 cents to $111.45 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Wholesale gasoline was up 1.77 cents to $3.1659 a gallon.
— Heating oil added 1.96 cents to $2.9926 a gallon.
— Natural gas lost 2.3 cents to $3.506 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.