Sector movers: Oil rebound boosts energy stocks as BHP cuts US rig numbers

A rebound in oil prices pushed stocks in the energy sector higher on Wednesday on the back of speculation that production in the US could slow down.

Brent crude was up 3.3% at $49.56 a barrel in afternoon trade after dropping sharply the previous session.

The increase came after resources giant BHP Billiton announced plans to reduce the number of its US onshore rigs by June in response to the recent collapse in oil prices.

Depressed oil prices, currently trading near a five-and-a-half-year low, have prompted many producers to curtail spending on projects or even pull out of developing fields altogether.

BHP, the biggest foreign investor in US shale, said it would keep its shale investment programme "under review and make further changes if we believe deferring development will create more value than near-term production".

"Evidence is starting to mount that shale oil production in the US is untenable at current price levels and will have to come down to match demand," said analyst Jasper Lawler from CMC Markets UK.

Tullow Oil, Nostrum Oil & Gas, Premier Oil, BG Group and Shell were all putting in decent gains in London.

Takeover target Afren, however, dropped on after the news that it has been reviewing its “capital structure, liquidity and funding requirements” and looking at its cost base and spending plans for 2015 given the recent rapid plunge in oil prices.

Afren on Monday extended a ‘put up or shut up’ deadline for potential bidder Seplat to make an offer until 30 January.

Top performing sectors so far today
Mobile Telecommunications 5,340.18 +2.81%
Oil & Gas Producers 7,201.72 +2.59%
Oil Equipment, Services & Distribution 15,412.36 +1.97%
Industrial Metals & Mining 1,543.29 +1.89%
Forestry & Paper 11,913.12 +1.65%

Bottom performing sectors so far today
Food Producers & Processors 7,963.01 -1.15%
Health Care Equipment & Services 6,655.23 -0.56%
Electricity 8,911.09 -0.40%
Real Estate Investment & Services 2,761.52 -0.29%
General Retailers 2,949.18 -0.28%