London pre-open: Stocks seen little changed, with oil in focus

London stocks were expected to open little changed on Wednesday, with a focus on oil after prices fell following data from the American Petroleum Institute.

The FTSE 100 was seen starting the session four points lower than Tuesday’s close at 7,182.

Late on Tuesday, figures from the API showed a 14.2m barrel build in its crude oil inventory last week, compared to a 5.8m barrel rise the week before. As a result, oil prices took a hit and are likely to remain in focus ahead of the US Energy Information Administration's crude oil stocks data at 1530 GMT.

CMC Markets’ Michael Hewson said: “Oil prices are likely to be in the spotlight today due to sharp declines in Asia overnight after US API inventories blew out to 14.2m barrels, one of the biggest inventory builds in US history, and well above the 2.5m build expected.

“If today’s Cushing crude oil inventories are similarly strong, any hopes that OPEC producers had of $60 oil could quickly evaporate. It would appear that US producers, as it was expected they might be, are turning into OPEC’s biggest nightmare.”

There are no major UK data due.

In corporate news, mining giant Rio Tinto swung to a profit in the year to the end of December thanks to a recovery in commodity prices, as it announced a better dividend than expected and a $500m share buyback.

Net earnings came in at $4.6bn compared to a loss of $866m the year before, while underlying earnings rose 12% to $5.1bn.

Following its recent admission to the FTSE 100 index, packaging company Smurfit Kappa reported that earnings grew last year despite headwinds from higher raw material costs and adverse currency effects, while it hiked its dividend by 20%.

For calendar 2016, the company made record earnings before interest, tax depreciation and amortisation (EBITDA) of €1.23bn, up 5% from the previous year, and the EBITDA margin increased to 15.1% from 14.6% due to volume growth across markets, resilient box pricing and investment in high return projects.

Boosted by a much-elevated level of share dealing since the Brexit vote, Hargreaves Lansdown posted a strong set of half-year numbers and hiked its dividend 10%.

The investments and pensions group generated £184.8m of revenue for the six months ending 31 December, a 16% jump for the same period the previous year, while good cost control led to profit before tax leaping 21% to £131m.

RSA announced on Wednesday that it has signed contracts to dispose of £834m of UK legacy insurance liabilities to Enstar Group.

The FTSE 100 insurance firm said the transaction would initially take the form of a reinsurance agreement, to be effective at 31 December 2016, to be followed by completion of a subsequent legal transfer of the business.