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Oil prices tank on reports of possible output boost

Reports suggested oil-producing nations and Russia were in talks about hiking supply.


Russia is in talks with other oil exporters about production levels (PA)

Russia is in talks with other oil exporters about production levels (PA)

Russia is in talks with other oil exporters about production levels (PA)

Oil prices tanked on Friday on the back of reports suggesting that oil-producing countries would ramp up production levels.

Towards the end of the session, Brent crude prices were down 3.3% to 76.202 US dollars per barrel after a Reuters report said Saudi Arabia and Russia were in talks about raising oil production by 1 million barrels a day.

The rises reverse a recent rally for oil, with prices climbing above 80 US dollars per barrel last week. Some commentators were predicting prices could hit 100 US dollars per barrel over the summer.

David Madden, market analyst at CMC Markets, said: “The group of oil-producing nations will meet in Vienna next month and traders are now wondering if a production increase will be confirmed.

“Recently we saw prices hit 42-month highs, and dealers are now cutting their long positions amid talk of the production curb being eased.”

The pound weakened during the day as official data showed economic growth was at a four-year low, reversing gains the currency made yesterday on the back of solid retail sales figures.

Against the dollar, sterling was down 0.51% at 1.331. This was also due to the strength of the greenback, with the US dollar index hitting its highest level in six months.

The pound was flat against the euro at 1.141, although the single currency was on rocky ground amid political uncertainty on the continent.

Populist parties in Italy are close to forming a coalition, and the Spanish prime minister is at risk of being ousted over a corruption scandal in his party. Against the dollar, the euro was down 0.47% at 1.166.

The FTSE 100 closed the day 13.54 points higher at 7,730.28. The Cac 40 in France was 0.18% lower, and the Dax in Germany was up 0.65% towards the end of the week’s trading.

In UK markets, Ladbrokes owner GVC said its sales in the first quarter were damaged by extreme weather. The group saw like-for-like retail gaming revenue drop 5% in the 20 weeks to May 20, with sports betting falling 9%.

However, shares climbed 4.37% or 43p to 1,026p after the company said it was exploring opportunities in the US.

Shares at energy giant SSE edged up on Friday despite the company taking a knock on its profits last year.

SSE lost 430,000 customers and was stung by charges linked to the merger of its retail arm with rival Npower.

The group reported a 6% fall in adjusted pre-tax profit to £1.45 billion in the year to March 31, while bottom-line profits tumbled 39% to £1.09 billion. By the close, shares were up 6p to 1,421.5p.

Shares in Dunelm tumbled when the homewares retailer warned over profits after experiencing “challenging” trading conditions in the fourth quarter.

In an unscheduled announcement, the group said like-for-like store sales had dropped 4.7% and that underlying profits for the year would be “moderately below” last year’s £109.3 million.

At the market close, shares were down by 11.24% or 69p at 545p.

The biggest risers on the FTSE 100 were Smurfit Kappa up 108p to 3,108p, Kingfisher up 10.2p to 307.1p, BT Group up 6.8p to 209.95p and Whitbread up 125p to 4,256p.

The biggest fallers on the FTSE 100 were Royal Mail down 15p to 530p, BP down 11.4p to 555.1p, Royal Dutch Shell down 39p to 2,559p and Johnson Matthey down 50p to 3,420p.