UK equities closed slightly higher today, regaining ground from losses at the open. A late recovery in the oil price and metals gave a boost to commodity stocks.
The blue-chip FTSE 100 index finished 0.2 per cent higher at 6,353.52 points, bouncing from a low of 6,261.71 shortly after the open as investors feared equity would follow oil sharply lower.
The oil price fell last night following the Doha meeting of Opec and non-Opec oil producers failing to reach an agreement on a widely anticipated output freeze.
"This string of events almost suggests that the major players in the cartel had no real intention of curbing production, but simply exploited the explosive levels of volatility to manufacture speculative boosts in prices based on false expectations," said FXTM research analyst Lukman Otunuga.
De facto Opec leader Saudi Arabia demanded Iran sign up the freeze, while Iran argued it should be allowed to return its production to pre-sanction levels before putting its production on hold.
Oil dropped by over seven per cent initially but managed to pull back to pass its Friday close price before the meeting. Oil investors have been cheered recently by news that US shale production is beginning to decline.
"Since we had not factored in any significant effect from a production freeze accord in our recent oil price forecast, the failed Doha talks do not alter our outlook for the oil price. We still look for the price of Brent crude to average $46 per barrel in the fourth quarter of 2016 and $52 per barrel in 2017 on the back of a lower dollar, stronger global economic activity and a decline in non-Opec oil output," Jans Naervig Pedersen, senior analyst at Danske Bank, said in a note sent to clients.
Oil was supported by the news of a Kuwaiti workers' strike that brought down the country's oil output by half.
Oil and gas companies managed a partial recovery as the oil price bounced.
Miners were pushed higher as copper prices rose, as a weaker dollar meant funds were buying up dollar-denominated metals cheaper. The UK mining index rose 1.4 per cent.
Chip designer ARM Holdings languished at the bottom of the FTSE 100 today, down 3.8 per cent, after reports Apple will continue to cut back on iPhone production as sales slide. A downgrade to "hold" from "buy" by analysts at Jefferies added to the sell off.