Business Insight

Oil prices hit one-year high as Russia endorses Opec output freeze

Russian president Vladimir Putin said that limiting production was the "only way" to stabilise the oil market, which has suffered from a long-standing supply glut
Kalyeena Makortoff

COMMODITY stocks propelled the FTSE 100 higher after Russia's support for a crude output freeze sent oil prices to one-year highs.

The FTSE 100 closed higher by 0.8 per cent or 53.1 points at 7097.5 points, with shares in BHP Billiton, Royal Dutch Sell and Anglo American supporting the blue chip index.

Meanwhile, the pound resumed its downward slide, as short positions on the currency reached record highs and fears of a "hard Brexit" continued to spook markets.

Sterling was trading 0.4 per cent lower against the US dollar at 1.239, but was relatively flat against the euro to trade at 1.109.

Mining and oil stocks made gains after Brent crude prices soared by as much as 3.7 per cent to US$53.57 US per barrel.

BHP Billiton rose 34.5p to 1267p, Royal Dutch Shell rose 59.5p to 2227p, Anglo American shares jumped 21.5p to 1042.5p, and Rio Tinto rose 56p to 2732.5p.

It followed comments from President Vladimir Putin, who said Russia would be willing to join Opec in an output freeze.

Speaking at the World Energy Congress in Istanbul, the Russian president said that limiting production was the "only way" to stabilise the oil market, which has suffered from a long-standing supply glut.

"Russia is prepared to join joint measures limiting production and calls on other exporting countries to do the same," Mr Putin said, according to an English translation by AFP.

Amrita Sen, a chief oil analyst at Energy Aspects, said Russia's commitment to joining a potential Opec deal "has a clear motivation" in coordinating with Opec, given that the Russia's economy has suffered from low oil prices.

"With another 0.45 mb/d (million barrels per day) of new projects due to start-up in Q4 16, the country will be committed to ensuring higher prices and the global rebalancing, which any coordinated action will speed up," Ms Sen said.

Across Europe, the French Cac 40 and the German Dax closed higher, up about 1.06 per cent and 1.27 per cent, respectively.

In UK stocks, RBS fell by 1.8 per cent or 3.3p to 178.6p after documents leaked to the BBC and Buzzfeed claimed to show that the bank was profiting from struggling businesses.

Away from the top tier index, William Hill shares closed 2.8 per cent or 8.2p higher at 302.8p after the bookmaker confirmed it is in talks with Canadian poker firm Amaya about a potential £4.6 billion merger.

Shares in outsourcing firm Mitie Group rose 2.5 per cent or 4.9p to to 199p as the company announced that Ruby McGregor-Smith is to step down as chief executive, with former Cable & Wireless boss Phil Bentley replacing her by December 12.

The biggest gainers on the FTSE 100 were BHP Billiton up 34.5p to 1267p, Royal Dutch Shell up 59.5p to 2227p, Shire up 127p at 5323p, and CRH up 63p to 2723p.

The biggest losers on the FTSE 100 were Persimmon down 52p at 1701p, Taylor Wimpey down 3.9p at 143.8p, Travis Perkins down 38p at 1429p, and easyJet down 20.5p at 875.5p.

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Business Insight