Oil producers support FTSE after crude prices climb
DRILLERS battening down the hatches in the US ahead of Hurricane Harvey pushed up crude prices and the UK’S blue-chip oil producers in London yesterday to stop the FTSE 100 sinking into the red as the pound rallied against the dollar late on.
Rigs in key US oil producing hubs were evacuated as the hurricane, which could become the most powerful storm to hit the US coast since 2005, approached the mainland.
Brent crude, the UK benchmark oil price, climbed as high as $52.68 per barrel as oil majors in Texas and the US Gulf of Mexico curbed production.
The FTSE 100’s oil giants moved in lockstep with the price increase, with BP gaining 2.35p to 445.5p and Royal Dutch Shell B shares pushing up 10.5p to £21.73.
Robust metal prices on expectations of tightening supply in China helped blue-chip miners dominate the FTSE 100 leader board.
BHP Billiton advanced 20p to £14.37 while rival Rio
Tinto climbed 15.5p to £36.61.
The commodity stocks’ huge weighting stopped the wider FTSE 100 from reversing all of its gains as US Federal Reserve chairman Janet Yellen’s speech at the Jackson Hole central banking conference disappointed news-hungry traders to send the dollar sliding against the pound.
Sterling’s afternoon bounce towards the $1.29 mark lampooned blue-chip companies’ solid early gains with the UK’S benchmark index closing 5.6 points
lower at 7,401.46. Hopes that the merger of Standard Life and Aberdeen Asset Management will breathe new life into newly formed Standard Life Aberdeen
helped it climb 5.3p higher to 441.6p.
Upgrading it to “buy”, Citi analyst Haley Tam said that the company could benefit from synergy savings and a recovery in its Asia Pacific and emerging market franchises.
Amazon announcing that it will begin slashing food prices at newly-acquired Whole Foods stoked expectations of a new player in the supermarket price war to pull down Londonlisted grocers. Tesco slumped towards the bottom of the FTSE 100 leader board, shedding 3.3p to 184.2p, while J Sainsbury dipped 1.1p to 236.1p.
On the FTSE 250, engineer Weir Group inched up 24p to £18.13 after broker Peel Hunt bumped up the Scottish firm to its “buy” list, citing improved “book-to-bill” figures in its minerals and oil and gas departments.
Analyst Harry Philips said the two businesses were driving Weir’s momentum and that the revival of the shale industry in the US as the price of crude rises had proven that Weir can generate “substantial” profit growth in the $50 per barrel oil price environment.
Finally, elsewhere on the mid-cap index, IT services provider Computacenter soared 137p to £10.18, a 16pc surge, after upping its full-year earnings guidance as it posted a 66pc rise in pre-tax profit. Bucking the industry’s gloomy outlook, Mike Norris, the company’s chief executive, said that he had “never been more optimistic about the market’s potential”.