MARKET REPORT: BP rises on reports of a UAE bid for energy giant
With crude oil prices near record highs and the dollar rising, the oil giants will always find support.
But investors may have been hoping for a little more support for BP after news reports suggested that Abu Dhabi National Oil Company (ADNOC) had recently considered buying the energy giant.
However, the sources cited said that the United Arab Emirates’ state oil company’s deliberations did not go beyond the preparatory stage, so that explains the less than euphoric response.
Speculation: News reports suggested that Abu Dhabi National Oil Company had recently considered purchasing BP
Apparently the plans stalled after ADNOC determined that BP was not ‘the right fit’ for the company – although politics were also likely to be a factor, given tensions in the Middle East.
But the fact that ADNOC is even considering a full offer of £90 billion or taking a major stake in the company could set off alarm bells for the city.
BP, which reported profits of more than £11 billion last year, is the lowest valued global oil giant when measured by market capitalization versus cash flow.
BP shares rose 3.7 percent, or 19.1p, to 539.1p. Rival oil giant Shell rose 2.8 percent, or 80 cents, to 2937 cents.
Miners dominated the blue chip leaders’ boards, reflecting buoyant metal prices – not least gold’s unstoppable rise to record highs.
Fresnillo, which mines the yellow metal, stood out, adding 7.6 percent, or 44p, to 622.5p, while Chilean copper giant Antofagasta gained 2.2 percent, or 48p, to 2,266p.
Strong commodity issues saw the FTSE 100 rise 0.9 percent, or 71.78 points, to 7995.58. The FTSE 250 index lost 0.3 percent, or 65.63 points, from 19721.24.
Not all commodity-related stocks were in the green.
Petrofac fell 20.5 per cent, or 6.82p, to 26.5p, after the provider of infrastructure services to the energy sector informed shareholders of its ongoing strategic and financial restructuring efforts. The company said it “continues to face challenges” in securing new performance guarantees, but added that discussions were continuing.
Housebuilders were in high demand after JP Morgan analysts highlighted the opportunities for recovery in the sector around the looming general election, with housing expected to be a key focus for all political parties.
The US bank’s analysts upgraded the ratings of some housebuilders to ‘overweight’, including blue-chips Taylor Wimpey (3.3 percent, or 4.35p, to 134.6p) and Persimmon (1.3 percent, or 16 .5p, to 1282p). .
But airline troubles were the FTSE 100’s biggest decliners, with EasyJet down 4.3 percent, or 23.4 cents, to 527 cents and British Airways owner IAG, down 3.8 percent, or 6.45 cents, lost to 162.65 cents, pressured by higher fuel costs and escalation concerns. Tensions in the Middle East.
A big faller among small-cap stocks was Bermuda-based specialist non-life insurer R&Q. It fell 45.4 percent, or 2.49 cents, to 3 cents after it warned of a significant annual pre-tax loss due to higher costs when selling a business unit.
Bens Creek, owner of metallurgical coal mines in North America, lost 32.4 percent, or 0.28 pence, to 0.58 pence, after news it laid off 44 workers in West Virginia due to low prices and financial constraints.