London pre-open: Stocks seen higher as oil prices rise; eyes on BoE

London stocks are expected to open in the black on Thursday following a rally in oil prices.

The FTSE 100 is seen starting 85 points higher than Wednesday’s close at 5,922.

“Oil prices have continued to oscillate back and forth as concerns about oversupply get offset by economic data that on the face of it still remains more on the good side than bad, while jawboning from Russia about its willingness to talk about some form of deal with other oil producers about output reductions, continues to keep traders off balance, and has sent oil surging in the last 24 hours,” said Michael Hewson, chief market analyst at CMC Markets.

The BoE rate announcement is at 1200 GMT, along with the Inflation Report. In the US, initial jobless claims are at 1330 GMT while industrial new orders are at 1500 GMT.

Hewson said the BoE meeting and quarterly inflation report are expected to reinforce the low interest rate narrative with downgrades to both inflation and growth forecasts expected in light of the sharp declines seen in oil prices since the November bulletin.

“However, one should guard against a too dovish narrative given how far market expectations are for when interest rate rises are expected to rise. These are currently set out into 2017 with even some talk of a potential rate cut, which given recent data seems way too pessimistic. Given that and the fairly robust economic data it would not be surprising to see these risks played down, particularly given how short of sterling some market participants currently are.”

Shell full year profit drops 80%

Royal Dutch Shell said lower oil and gas prices have caused an 80% drop in full-year profit, down to $3.8bn (£2.6bn) for 2015.

The FTSE 100 oil giant said profit for the fourth quarter was $1.8bn, up from a loss in the third quarter of £6.1bn but down from the profit in the last quarter of 2014 of $4.2bn.

Royal Dutch Shell chief executive officer Ben van Beurden said the completion of the BG Group merger will rejuvenate the company and improve shareholder returns.

Vodafone was still looking to stabilise its operations in the third quarter of the year, reporting some organic growth but contractions, with particular struggles in Europe.

The FTSE 100 mobile network operator posted a 1.4% increase in group organic service revenue to £10.28bn, though it was down 6.3% on a reported basis in the three months to 31 December 2015.

Vodafone said its recovery in Europe was ongoing, with that market contracting by 0.6% on an organic basis and 7.1% on a reported basis.

Its commercial progress in that region saw it add 506,000 net mobile contracts during the period, and 311,000 broadband customers.

Fixed line service revenue specifically was up 3.7% in Europe, with the firm now marketing high speed broadband to 69m customers, with 29m on the network.