Oil giants rally pushes London market higher
The FTSE 100 Index closed up 46.93 to 7,500.41.
Energy giants helped the London market rally higher on Tuesday as investors responded to a choppy day’s trading on the oil and gas markets.
The FTSE 100 Index closed up 46.93 to 7,500.41 as shares in Royal Dutch Shell B and BP rose 35.5p to 2,448p and 12.3p to 511p respectively in response to an earlier rally from Brent crude.
The price of oil had surged to $65.80 (£49.38) – its highest level since the middle of 2015 – after the market experienced a double-whammy hit following a European gas hub explosion and the shutdown of a major North Sea pipeline.
Operator Ineos said the Forties pipeline, which carries 40% of the North Sea oil and gas, could be offline for up to three weeks as they scramble to repair a crack.
Separately, UK natural gas prices churned out double-digit growth to reach 73.7p a therm at one stage following a blast at a natural gas plant in Austria, which transports a significant amount of European gas.
Royal Dutch Shell B and BP managed to hold onto their gains at market close despite Brent crude taking a downward turn in afternoon trading, falling 1.2% to $63.95 (£47.99).
David Madden, market analyst at CMC Markets, said: “Brent Crude oil hit a level not seen since early June 2015 and that has pushed up the price of Royal Dutch Shell and BP.
“The underlying oil market has since turned lower but the oil stocks are still in positive territory.
“Energy producers like Centrica, National Grid and Scottish and Southern Energy are higher on the session as a gas explosion in Austria could disrupt supply.”
Across Europe, Germany’s Dax was 0.5% ahead and the Cac 40 in France was 0.7% higher.
On the currency markets, the pound edged down 0.1% versus the US dollar at 1.33 after initially responding positively to the latest batch of inflation data.
Inflation unexpectedly jumped to a near six-year high last month as air fares and computer games pushed up everyday prices.
Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) rose to 3.1% in November, up from 3% in October.
The outcome spells more misery for households as they face a further squeeze on their finances ahead of the Christmas period.
It also means Bank governor Mark Carney must pen a letter to Chancellor Philip Hammond – due to be published in February – outlining the reason behind CPI’s rapid rise.
A rise in in the cost of recreational goods means that Mark Carney’s letter to the Chancellor will be more expensive to write, following the increase in UK inflation to 3.1% in November.— Philip Shaw (@philipshaw8) December 12, 2017
The Government has set a CPI target of 2%, with protocol dictating the Bank must contact Mr Hammond if inflation exceeds 3% or falls short of 1%.
Sterling was 0.3% higher against the euro at 1.136.
In UK stocks, supermarket giants were among the biggest fallers after data showed discount rival Aldi was Britain’s fastest-growing grocer during the latest quarter, with sales up 15.1% year on year.
Industry data from Nielsen revealed Tesco had the most improved performance among the Big Four over the last 12 weeks, with sales up 3.4% year on year, followed by Sainsbury’s at 1.9%.
However, shares in Morrisons and Sainsbury’s fell by 9.9p to 211.5p and 10.1p to 234.6p.
The biggest risers on the FTSE 100 Index were Experian up 39p to 1,604p, BP up 12.3p to 511p, Admiral Group up 44p to 1,899p, Centrica up 3.3p to 144.8p
The biggest fallers were Morrison’s down 9.9p to 211.5p, Sainsbury’s down 10.1p to 234.6p, CRH down 45p to 2,596p, Fresnillo down 19p to 1,287p.