Market report: Oil giants push FTSE to nine month high as supply fears ease

Louis Ashworth
·3-min read

Oil giants BP and Shell led the FTSE 100 to a nine-month high on Friday, as British equities continued a rare run of outperformance against their European peers.

The energy companies gained ground – with BP rising 10.5p to 277p and Shell 42p to £13.51 – after oil producers agreed to a moderate increase in output, easing fears of a looming oversupply.

Brent crude oil neared $50 a barrel, its highest price since March, after Opec and Russia struck an agreement to increase supply by 500,000 barrels a day from the start of next year.

SEB analyst Bjarne Schieldrop said demand for oil should remain strong during 2021 as vaccines are rolled out and demand picks up. “The longer-term outlook for oil prices is indeed bleak. No doubt about it,” he said. “But the coming five years are probably going to be very good, with continued robust global population growth and oil demand growth.”

London’s blue-chips were fairly evenly split between risers and fallers during the session, but upward moves for several heavyweights kept the index above continental peers.

The FTSE 100 largely shrugged off a rollercoaster day for the pound, which see-sawed on Brexit headlines, hitting a two-year high in the afternoon that is the outcome of a sustained softening in the dollar, which is at its weakest level since early 2018.

Glencore shares rose strongly, climbing 7.2p to 237.7p, after it confirmed it will maintain its coal assets in spite of a pledge to be net zero by 2050. The Swiss-headquartered group said it could provide “responsible stewardship” of the coal assets as they deplete.

Chief executive Ivan Glasenberg also announced plans to step down.

GVC Holdings was among the biggest blue-chip fallers, dropping 42p to £10.16 after The Guardian reported a proposed review of the UK’s gambling laws could begin as soon as Monday. The paper said the review could look at a ban on sports sponsorship, as well as limits on online gambling stakes.

B&Q owner Kingfisher dropped 13.7p to 268.8p as fellow retails lined up to repay the money they saved through the Government’s programme of business rates relief.

Bloomberg Intelligence analysts warned the Government may soon put pressure on home-related retailers – which thrived as locked-down Britons turned to DIY projects – to give back the money.

On the FTSE 250, which traded flat, software and IT group Micro Focus climbed 27.8p to 430.6p, rising strongly for a second session after tech giant Amazon named the firm as a partner in helping prospective clients migrate to the US company’s Amazon Web Services platform.

Cineworld shares took a beating, dropping 10.9p to 62.1p, after Hollywood studio Warner Bros overhauled its film release strategy and said all its 2021 films would be released online on the same day they hit cinemas.

Cineworld suggested the decision disregarded the progress made on treating Covid-19, saying vaccines should enable cinemas to make “a great comeback”.

It expressed hopes that WB would reach a new agreement with cinemas, saying screens would always be “the best place to watch a movie”.