Oil prices rise after Middle East support to extend production cuts

An Iraqi worker operates valves at the Rumaila oil refinery, near the city of Basra. Iraq and Algeria signalled support to extend Opec production cuts, which has helped buoy oil majors on the FTSE 100
Kalyeena Makortoff

CRUDE oil prices climbed back over the US$50 after Iraq and Algeria signalled support to extend Opec production cuts, helping buoy oil majors on the FTSE 100.

Brent crude surged 2.4 per cent to around US$50.12 per barrel yesterday afternoon, recovering some of the past week's losses prompted by concerns that no decision had been made on whether Russia would agree to extend oil cuts, meant to buoy prices.

It was helped by signs of support from producers in the Middle East, and fresh data showing a drop in crude inventories in the US.

The news sent BP shares higher by 4.8p to 460.55p, while Royal Dutch Shell's 'B' shares rose 27.5p to 2,168.5p, supporting a 0.6 per cent jump on the FTSE 100, which closed 43.03 points higher at 7,385.24.

Michael Hewson, chief market analyst at CMC Markets UK, said: Crude oil prices have continued to stabilise after API inventories showed a bigger than expected fall, while Iraq and Algeria were reported to favour some form of Opec cut extension, while Saudi Arabia announced it would cut back on its exports to Asia."

However, he cautioned that while "it wouldn't be a surprise" to see a rebound in oil prices, it is more likely that prices will continue to hover around the US$50 per barrel level.

Sterling, meanwhile, failed to break past the 1.30 level against the US dollar and was hovering near the flatline at 1.293 in afternoon trading.

Versus the euro, the pound was up nearly 0.1 per cent at 1.189.

Across Europe, the French Cac 40 and German Dax ended the day nearly flat, up just 0.05 per cent and 0.07 per cent, respectively.

In UK stocks, Barclays shares ended the day up 4.65p at 209.95p.

The bank held its annual general meeting yesterday, where a substantial number of investors refused to back the chief executive's reappointment after breaching the bank's whistle blower protection rules.

More than 16 per cent of votes cast failed to back his re-election, with nearly 14 per cent abstaining and 2.82 per cent voting against.

Lloyds Banking Group rose 0.86p to 69.88p amid news that Noel Edmonds has launched a £50 million compensation claim against the bank, with the Deal Or No Deal star claiming he has suffered "deep distress and public humiliation" caused by fraud at the hands of former HBOS Reading staff.

ITV shares dropped 4.6p to 196.2p after the broadcasting giant said net advertising revenue dropped 9 per cent to £393m in the first quarter, but said predictions for the full-year were unchanged.

Barratt Developments rose 13.5p to 610p after reporting signs of a buoyant housing market, with total completions on course to reach 17,350 for the full year – the highest amount since 2008.

Shares in TalkTalk Telecom Group plunged 13.7p to 168.8p – annual earnings for this year fell short of expectations despite growing by 17 per cent to £304 million, resulting in a cut to the year's final dividend from 10.58p to 5p.

The biggest risers on the FTSE 100 were Hargreaves Lansdown up 38p to 1,446p, Associated British Foods up 67p to 2,877p, SSE up 33p to 1,464p, and Barratt Developments up 13.5p to 610p.

The biggest fallers on the FTSE 100 were ITV down 4.6p to 196.2p, Pearson down 13p to 721p, Rolls-Royce holdings down 15.5p to 874.5p, and Hikma Pharmaceuticals down 23p to 1,956p.

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