Oil prices rise on Iran and hurricane worries
Investors fear a shortage of oil supplies.
Oil prices ticked higher on Tuesday as investors feared a shortage in the wake of Donald Trump’s sanctions on Iran and expected hurricanes in the US.
A barrel of Brent Crude was trading at 78.7 US dollars, marking an increase of 1.8%. Meanwhile, West Texas Intermediate (WTI) climbed 1.8% to 68.7 dollars per barrel.
“WTI and Brent crude oil are higher as traders are getting nervous that oil supplies could fall once the US’s sanctions on Iran are implemented. Dealers are also nervous about Hurricane Florence, which is gathering power and is approaching the Carolinas.
“The extreme weather may impact the energy markets, and in situations like these, dealers often fear for the worst,” said David Madden of CMC Markets.
In currency markets, positive UK employment data and the extension of Mark Carney’s term as Bank of England governor both failed to lift sterling, which ended the day 0.1% lower against the dollar at 1.300.
Versus the euro, the pound was down 0.1% at 1.122.
Fresh data showed that the number of people in work continued to rise, while average earnings have grown slightly faster than inflation.
“Although the jobs report illustrates an encouraging picture of the UK economy, this is unlikely to convince the Bank of England to raise interest rates anytime soon,” commented Lukman Otunga, research analyst at FXTM.
“The central bank is poised to remain on hold until the thick smog of uncertainty created by Brexit fully dissipates.”
Meanwhile, Chancellor Philip Hammond announced a seven-month extension to Mr Carney’s tenure. It is thought the increasing fears of a no-deal scenario also increased the need for continuity at the top of the Bank.
Analysts at Spreadex said the announcement had “likely contributed to the pound dipping 0.1% against both the euro and the dollar, with the currency disappointed that Carney’s contract extension wasn’t longer”.
Top-flight stocks in London were a shade lower, recovering from an earlier slump when it emerged that China will seek permission from the World Trade Organisation (WTO) to impose sanctions on the US next week.
The FTSE 100 index clocked in at 7273.54, down 5.76 points, or 0.08%, despite the weaker pound.
Ashtead Group was the leader of the blue-chip risers. Shares closed 118p higher at 2,398p.
The equipment rental firm reported a 23% jump in pre-tax profits to £274.4 million for the company’s first quarter, covering the three months ending July 31. That was against revenues of £1 billion, up 22% from a year earlier.
Trailing the index were tobacco companies British American Tobacco and Imperial Brands, down 2.71% and 3.34% respectively.
On the FTSE 250, sportswear chain JD Sports notched up record half-year results as profits jumped by nearly a fifth despite a tough retail market and difficult times during the heatwave.
The company’s share price climbed 31.8p to 519.2p.
The chairman of Debenhams lashed out at speculation over the struggling retailer’s future, insisting that the chain is not insolvent. Shares regained some ground – rising over 6% or 0.77p to 12.27p – after a 17% plunge on Monday when it emerged that the chain had appointed advisers at KPMG to consider its options.
The biggest risers on the FTSE 100 were Ashtead up 118p at 2,398, Shire up 77.5p at 4,342.5p, Rightmove up 7.3p at 487.3p and Royal Dutch Shell up 31.5p at 2,458.5p.
The biggest fallers on the FTSE 100 were Imperial Brands down 90p at 2,608.5p, British American Tobacco down 99p at 3,554.5p, Fresnillo down 18.4p at 794p and Pearson down 19.8p at 866.6p.