Fears of supply surge send oil giants BP and Shell tumbling
OIL giants BP and Shell dragged the FTSE 100 lower after a sharp slide in crude prices caused by traders bracing for a supply surge that may end a year-long rally.
Crude tumbled to its lowest level since April as traders fretted over four major Libyan ports reopening, slowing Chinese growth dampening demand and reports indicating that Saudi Arabia is bowing to US pressure to lower prices by increasing supply to Asian markets. US treasury secretary Steven Mnuchin also turned up the heat on prices by admitting that it will consider waivers for some countries struggling to wind down their Iranian oil imports ahead of a November deadline.
Brent crude prices tumbled 4.1pc to $72.25 per barrel while BP and Royal Dutch Shell “B” followed them lower, sinking 13.3p to 557.5p and 58.5p to £26.73, respectively. With miners dropping on signs of slowing growth in China, commodity stocks knocked the FTSE 100 to a 61.42-point loss at 7,600.45.
Elsewhere, Micro Focus snapped a post-results rebound after City analysts piled the pressure on the troubled software giant, warning investors that it could struggle to steady the ship after disposing of its Suse business for £1.9bn.
Credit Suisse argued that the recent update offered “limited comfort” and that without Suse, an open source software business, it was “difficult to argue that revenue stability is plausible”, weakening its shares 37p to £12.42.
Car insurers skidded after a survey found that premiums suffered their sharpest annual slide in four years. Motor insurance premiums tumbled 11pc in the second quarter of the year, according to Confused. com and Willis Towers Watson figures.
The AA underperformed its rivals after Barclays warned that the roadside rescue firm could struggle if car insurance premiums continued to decline and competition intensified. The AA closed 5.4p lower to 119p on the downgrade to “equal weight”, while insurers
Admiral and esure slumped 9p to £19.39 and 2.3p to 196.1p, respectively.
Debenhams fought back from an 8pc intraday slide after denying a report it is facing a cash crisis in the wake of three profit warnings this year. It recovered to flat territory before dropping to a 0.7p loss at 14p, a new record low.
Struggling asthma inhaler maker Vectura inched up 1.7p to 79.7p after appointing Paul Fry as its chief financial officer from Immunocore, while Go-ahead Group slumped 141p to £13.88 after HSBC delivered the transport operator a downgrade to “hold”. Gold miner Randgold
Resources admitted that talks with workers to resolve a labour dispute at its Tongon mine in the Ivory Coast had broken down but its shares held at just a 10p loss, at £54.70. Finally, miner Bacanora
Lithium secured $90m (£68m) in investment from Oman’s Sovereign Wealth Fund and Japanese trader Hanwa to help fund its Sonora project in Mexico. Shares fell 9pc to 72.5p after proposing a £76m cash call.