Sector movers: Oil stocks shrug off market volatility

Oil and gas stocks shrugged off volatility in crude markets on Wednesday as headline London indices stayed in positive territory.

The FTSE 100 ended 0.54% or 31.73 points higher at 5,960.97, while the FTSE 250 ended 0.05% or 7.86 points higher at 16,695.77. Oil markets witnessed another volatile session, with Brent and WTI futures alternating between positive and negative forays, while staying at 12-year lows as oversupply concerns and lacklustre demand continue to dominate market chatter.

At 1718 GMT, the Brent front-month futures contract for February delivery was down 1.36% or 42 cents at $30.44 per barrel, while the WTI was up 0.13% or four cents at $30.48 barrel.

Responding to the ongoing market volatility, the US Department of Energy's statistical arm – Energy Information Administration – said in its Short-Term Energy Outlook that crude oil inventories would continue to rise in 2016 by 700,000 barrels per day, following an increase of 1.9m bpd in 2015.

Meanwhile, base metal futures saw a recovery on the London Metal Exchange on positive sentiment from China. Three-month delivery contracts of nickel (up 0.2%), zinc (up 1.3%), primary aluminium (up 0.6%) and lead (up 0.6%) posted nominal upticks in late afternoon trading. However, copper (down 0.1%) and tin (down 1.5%) contracts extended the previous session’s losses.

BP (up 3.95%) led the blue chips higher, followed closely by FTSE 100 peer Babcock International (up 3.82%). Among the midcaps, the resource stocks charge was led by Ophir Energy (up 4.73%), Tullow Oil (up 4.71%) and Acacia Mining (up 4.49%) with the trio among the FTSE 250’s biggest risers.

Meanwhile, Premier Oil’s shares were suspended from trading on Wednesday morning pending the announcement of a potential acquisition of assets which may be classed as a reverse takeover under the Financial Conduct Authority listing rules. Later in the day, the group announced it had struck a deal to acquire E.ON’s UK North Sea assets for a net $120m (£83.3m) plus working capital adjustments.

Elsewhere, Lloyds Banking Group (down 2.16%) was on the fallers’ roster after Exane BNP Paribas downgraded the stock from ‘neutral’ to ‘underperform’ on a bleak operational outlook for UK banks.

On a more positive note, Galliford Try was a high riser after the construction group pointed to solid trading across the board in the first half, as its order book rose in an improving market.

Finally, Sports Direct advanced after it snapped up an 11.5% stake in Umbro and Lee Cooper-owner Iconix Brand Group and 2.3% of US retailing giant Dick's Sporting Goods. The group last week warned on profits amid widespread criticism about the treatment of its staff.