Oil giants BP and Shell power FTSE 100 to ten-month high

Investors turned bullish on oil today after the Opec cartel of producers finally agreed a deal that is expected to prop up crude prices into next year.

Shares in BP and Royal Dutch Shell were more than 2% higher after the OPEC+ alliance with Russia moved to raise output by 500,000 barrels a day from January.

That is better than the default increase of two million barrels a day and should restrain supply so that oil inventories continue to decline. The agreement has also bought the industry more time to see the impact of recent vaccine breakthroughs.

The Brent crude price today responded by nudging 50 US dollars a barrel, which is the highest level since February and compares with less than 20 US dollars in April.  

Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, said: “Oil demand is likely to rebound strongly in 2021 along with the roll-out of vaccines. There are good reasons to be bullish for oil.”

BP and Royal Dutch Shell shares are now at their highest levels since the summer after adding 7.3p to 273.8p and 34.4p to 1,343.8p respectively, while Premier Oil rebounded 1.4p to 22.3p and Tullow Oil lifted 1.7p to 33.3p.

The commodity-driven optimism meant the FTSE 100 index reached its highest level since February after climbing another 52.07 points to 6,542.34. The momentum in the FTSE 250 index, which lifted 112.36 points to 20,244.8, was driven by a further recovery for Micro Focus International, with the software firm up 39.2p to 442p.

Estate agency businesses continue to be in hot demand after shares in Hunters Property surged 44% on the back of a takeover approach.

The owner of 200 offices has caught the eye of the Property Franchise Group, whose brands include Martin & Co and Parkers. It comes amid recent interest in Countrywide from Connells.

Hunters rose 25.5p to 84p, while its potential suitor fell 10p to 171p.  

In other consolidation moves, components maker DiscoverIE is spending 14.5 million euros (£13.1 million) on Germany's Limitor, which makes temperature and current sensors used in industrial applications. Shares added 10p to 570p.