OPEC’S failure on Friday to agree to curb oil production weighed yesterday on the FTSE 100 index.
The cartel failed to reach agreement despite a global supply glut and the strength of the dollar, which is leading to the collapse of global oil prices, with the resulting uncertainty hitting stock markets.
The FTSE 100 closed 0.24 per cent down at 6,223.52 points, due to Royal Dutch Shell, BG Group and BP. “A stronger dollar and the aftershock of Friday’s Opec meeting are weighing on the oil market,” Tamas Varga, oil analyst at PVM Oil Associates, said.
Royal Dutch Shell shares flopped 4.56 per cent. Meanwhile, BG Group’s shares slumped 4.09 per cent and BP’s stock fell 3.36 per cent to per share.
“The ability of the FTSE 100 to perform is clearly being hindered by tumbling oil prices, and with Brent hitting a new six-year low, the likeliness is that this will hold back this market for some time yet,” said Joshua Mahony, market analyst at IG.
“As Shell, BG and BP lead the FTSE losers, the fate of the FTSE is in the hands of the dollar as another Fed-fuelled dollar rally could send crude tumbling once more. With Opec seeming less and less like a cartel and more like an audience with the Saudis, it is likely crude prices could fall further yet.”
However, the prospect of falling oil prices led tourism stocks to make gains. TUI’s stock was 1.67 per cent up, while Easyjet rose 1.79 per cent. Carnival’s share price was 1.36 per cent higher while InterContinental Hotels rose 0.58 per cent per share in trading.
Rolls-Royce topped the index, rising 2.69 per cent on optimism that talks with shareholders this week will help bring about a quicker and more effective turnaround, said CMC Markets analyst Jasper Lawler.
“Broker upgrades for property firm Hammerson and rating reaffirmations after earnings last week for Primark-owner Associated British Foods (AB Foods) meant both shares were top risers,” he added.
AB Foods rose 1.87 per cent while Hammeron was up 1.41 per cent.
Tesco fell by 3.44 per cent on the same day that veteran Jill Easterbrook announced she would be leaving the company.
Today, UK markets will take their cues from manufacturing and industrial production data coming out at 9.30am.