The FTSE 100 has raced above 6,900 in early trading as oil flirts with $50 a barrel following a surprise agreement at Wednesday’s Opec meeting.
Interactive Investor head of equity strategy Lee Wild noted BP was one of its most actively traded stocks of the morning and that Shell had risen 5 per cent “as higher oil prices could save its generous dividend”.
Wild says it was “shock decision” as Opec members have “been on the same page” since 2008.
However, oil futures retreated on early Thursday as the market grew skeptical on the implementation of Opec’s plan as the details will still have to be confirmed at its November meeting.
Already this morning Brent crude fell 26 cents to $48.43 a barrel having opened at $49.09 following the news.
WTI crude fell 6 cents to $46.99 a barrel, after hitting $47.47.
Opec has agreed to consider a cut to 32.5-33m barrels a day, only slightly lower than the average 33.2m barrels a day it pumped in August.
Each member’s individual cuts would not be decided until the next meeting, which will take place in Vienna.
Wild says “whether oil ministers walk the walk is another thing”.
“It’s worth remember, too, that Russia is producing more oil now than at any time since the Soviet era, Iran is an enthusiastic producer, and Libya is coming back on stream. It’ll take a serious deal in two months’ time to make a move above $50 a barrel stick.”