London pre-open: Stocks seen higher as oil prices surge

Stocks in London were set to open higher on Monday as oil prices surged after non-OPEC members reached a deal with OPEC on Saturday for the first time since 2001 to cut production, pushing prices to their highest levels since 2015.

The FTSE 100 was called to open 21 points firmer than Friday’s close at 6,975.

CMC Markets’ Michael Hewson said: “Building on from last week’s gains we look set to start this week on the front foot after non-OPEC members concluded a deal with OPEC to cut production as part of the recent deal to try and keep a floor under oil prices, sending Brent prices to their highest levels since July 2015, and up over 4% on the day. With US prices also following suit the big question now is whether the shale producers start to bring dormant production capability back on line.”

Non-OPEC countries agreed to cut production by 558,000 barrels per day. This is in addition to OPEC’s recent agreement to slash output by 1.2m barrels a day.

Looking ahead to the rest of the week, the focus will turn to the Federal Reserve rate announcement on Wednesday, as markets have largely priced in a hike.

“There should be no surprises around this meeting, though the press conference will take on an even greater significance in the context of the signalling of Fed intentions in 2017, as regards further rate rises,” said Hewson.

Glencore and the Qatar Investment Authority announced on Monday that they had concluded various agreements providing for the establishment of a 50:50 consortium, to take a chunk of Russian state gas operation Rosneft.

The consortium also entered into agreements in connection with the further privatisation of Rosneft, whereby the consortium will acquire from Rostneftegaz a 19.5% interest in the issued share capital of Rosneft for €10.2bn.

DFS Furniture’s chairman, Richard Baker, will step down in spring next year after just over six years in the role.

The company said a “thorough” process to appoint a new chairman led by senior independent director Luke Mayhew will begin immediately and a further announcement will be made in due course.

Engineering firm WS Atkins has agreed to sell its minority investment in the M25 motorway to a consortium of institutional investors for £66.3m.

The FTSE 250 company will sell its private finance initiative in the motorway to Edge Orbital Holdings, which is being advised by broker Macquarie, subject to third party consents and is expected to be completed by the end of 2016.