MARKET REPORT: Oil stocks rally as crude moves towards $ 80

Oil prices hit their highest levels in three years, as surging post-pandemic demand and production constraints raised fears of a tightening of supplies.

Brent crude headed for $ 80 a barrel, its most expensive since October 2018, after major oil-producing countries struggled to ramp up production fast enough amid ongoing maintenance delays caused by Covid- 19.

U.S. production in the Gulf of Mexico is also held back after Hurricane Ida hit the Louisiana coast last month, shutting down most oil rigs and refineries in the region and putting additional pressure on inventories. global.

Trending Upward: Goldman Sachs Analysts Predict Brent Crude To Hit $ 90 A Barrel By Year End

The surge in prices looks set to continue, with Goldman Sachs analysts predicting Brent crude will hit $ 90 a barrel by the end of the year. They said the gap between global supply and demand is larger than they initially expected.

Analysts also said a global shortage of natural gas “will increase oil-fired electricity production”, pushing prices further up.

Some big winners of the surge in prices have been BP and Shell, both of which posted strong gains. BP shares rose 3.5%, or 11.1p, to 331.3p while Shell climbed 4.4%, or 66.6p, to 1595p, its highest level in six months.

Smaller oil and gas companies also benefited from a boost, with the Harbor Energy mid-cap increasing 8.3%, or 28.6p to 373.2p, while North Sea-focused Inquest increased jumped 5%, or 1.15p, to 24.3p.

Meanwhile, oil services companies were boosted by expectations of increased demand, with Lamprell adding 8%, or 2.5p, to 33.8p and John Wood Group up 1.9%, or 4, 3p, at 228.1p.

AJ Bell Chief Investment Officer Russ Mold said: “Many investors, including large asset managers, will blame themselves for avoiding oil stocks as part of a global shift towards larger companies. ESG-friendly Despite the transition to renewables around the world, it is clear that oil is still needed in today’s world. ‘

The FTSE100 rose 0.2%, or 11.92 points, to 7,063.4. The FTSE 250 was virtually stable at 23,608.63 points.

Fears of lingering fuel shortages and inflationary worries continued to linger, while investors also digested the inconclusive result of Sunday’s German election.

Meanwhile, retail giant JD Sports has reportedly entered the beauty market by purchasing a stake in Hairburst, a maker of shampoos, hair vitamins and styling products. However, investors didn’t seem impressed as stocks fell 2.2%, or 24.5p, to 1076.5p.

Hikma Pharmaceuticals rose 1.2%, or 29p, to 2415p after buying injectable drug maker Custopharm for £ 274million. The deal will add 13 products approved by US regulators to Hikma’s own injectables company.

Office property firm Workspace climbed 0.8%, or 7p, to 873p after acquiring 57,000 square feet of office space in London for £ 43million.

Saietta Group, an electric vehicle engine maker listed in London in July, was one of AIM’s biggest carriers after unveiling a deal to supply its technology to electric cargo bike maker Electric Assisted Vehicles (EAV) . Saietta shares jumped 21.5%, or 42.5p, to 240p after the news broke.

Small-cap Elixirr climbed 28.6%, or 150p, to a record 675p after the consulting firm reported that first-half 2021 profits more than doubled to 2.6 million. pounds to 6.4 million pounds.

Water company United Utilities fell 1.3%, or 13.3 pence, to 994.2 pence, as it said higher inflation pushed up its operating costs. Despite this, the company still saw an increase in demand from customers continuing to work from home.

Covid-19 test maker Novacyt slipped 4.1%, or 12.7p, to 299p as a contract dispute with the Department of Health and Social Affairs (DHSC) slashed part of its half-year revenue .

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Felix J. Dixon

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