Business

Oil price rally fails to cheer investors as FTSE struggles to stay afloat

Jeremy Corbyn MP, leader of the Labour Party, center, Tom Watson MP, deputy leader of the Labour Party, left, and Angela Eagle MP, shadow first secretary of state and shadow secretary of state for Business, Innovation and Skills, unveil a new poster from the ‘Labour In for Britain’ campaign to remain in the EU in London, yesterday. The referendum will be held on June 23 PICTURE: Frank Augstein/AP
Ben Woods

ROYAL Dutch Shell was in the ascendency after investors cheered on plans to trim investment and cut costs in the face of lower oil prices.

The oil major was the biggest top-flight riser – up more than 3 per cent – after it said spending would be slashed by 35 per cent to between US$25 billion and US$30bn (£17.3bn and £20.8bn) over the next four years.

But the FTSE 100 Index struggled to remain in positive territory, just 11.1 points higher at 6284.5, after a collapse in the copper price batted away the benefits of an oil price rally and sent the mining giants tumbling into the red.

Anglo American and Glencore were down more than 3 per cent and 2 cent respectively.

The oil price continued rise on the back of the weakening dollar and the recent supply outages in Nigeria triggered by militant attacks on its oil infrastructure.

Brent crude was up 0.8 per cent to US$50.94 a barrel, with BP stepping up 4.9p to 373.3p.

Across Europe, Germany's Dax was 1.6 per cent higher, while the Cac 40 in France rose 1.2 per cent.

Sterling remained strong against the dollar and the euro after fresh polls put the 'Remain' camp in the lead ahead of the EU referendum.

The pound was up 0.8 per cent against the dollar at 1.457, while sterling climbed 0.9 per cent against the euro at 1.283.

The swing away from the three-week low against the dollar seen on Monday came after support for staying in the EU was given a one-point lead in an online YouGov survey for The Times, and a telephone poll by ORB for the Daily Telegraph.

However, some analysts have questioned whether the currency movement in early trading could have been caused by a "fat finger trade" – an order to buy or sell that is larger than intended.

In stocks, Royal Dutch Shell was 52.5p higher at 1764.5p as the firm expects to make US$4.5bn (£3.1bn) in efficiency savings from its £35bn merger with BG, up from its previous estimate of US$3.5bn (£2.4bn).

Shell chief executive Ben van Beurden said: "As well as low oil prices today, we are seeing higher levels of price volatility, due to geopolitical change, the speed of information flows, and the pace of innovation in our sector.

"By capping our capital spending in the period to 2020, investing in compelling projects, driving down costs and selling non-core positions, we can reshape Shell into a more focused and more resilient company, with better returns and growing free cashflow per share."

Elsewhere, Anglo American was down 21.1p to 665.5p, Glencore fell 4.1p to 140p and Antofagasta slipped 9.9p to 440.1p.

Shares in Sports Direct rocketed after boss Mike Ashley ramped up the charm offensive during his meeting with MPs over working practises at the firm.

Mr Ashley admitted that he paid workers below the minimum wage, also telling MPs that he has discovered "issues" with working practices at the retailer as part of an internal review.

The retail tycoon told MPs from the business select committee that security guards at the company's Shirebrook warehouse held up staff from leaving, meaning they were effectively paid less than the minimum wage.

Shares were up more than 5 per cent or 19.6p to 383.2p.

The biggest risers on the FTSE 100 Index were Royal Dutch Shell A, up 55p to 1756p, Royal Dutch Shell B, up 52.5p to 1764.5p, Burberry Group, up 23p to 1102p, and Next, up 110p to 5470p.

The biggest fallers were Anglo American down, 21.1p to 665.5p, Glencore, down 4.1p to 140p, Antofagasta, down 9.9p to 440.1p, and Direct Line Insurance, down 6.6p to 369p.

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