Sector movers: Oil stocks slip as airlines fly higher

Oil and gas stocks declined on Tuesday, but airline shares flew higher as the FTSE 100 ended the session marginally in positive territory.

At the close of proceedings, the FTSE 100 ended 0.65% or 37.89 points higher at 5862.17, while the FTSE 250 ended 0.16% or 25.81 points lower at 15,702.29. Oil futures headed lower despite a pledge by major producers to freeze production.

After nearly a month of market chatter about OPEC and non-OPEC producers announcing some sort of a production cut led by Russia and Saudi Arabia, officials from three OPEC member nations – Saudi Arabia, Qatar and Venezuela – and the Russians met in Doha earlier in the session, and agreed to ‘freeze’ oil production at January levels, provided others follow suit too.

Saudi Arabian oil minister Ali al-Naimi said, “Freezing now at the January level is adequate for the market. We don’t want significant gyrations in prices, we want to meet demand. We want a stable oil price.”

However, the announcement fell short of a real terms cut, with Iran apparently unwilling to join the move. In response, oil futures practically reversed all of the gains achieved overnight.

At 1657 GMT, the Brent front-month oil futures contract was down 2.07% or 69 cents to $32.70 per barrel, while WTI was down 0.54% or 16 cents to $29.28 per barrel.

Meanwhile, precious metals stayed firmly in negative territory. The COMEX the front-month gold futures contract was down 2.11% or $26.20 to $1,213.20 an ounce, while spot gold was broadly flat at $1,210.79 an ounce.

COMEX silver fell 2.72% or 43 cents to $15.36 an ounce, while spot platinum fell 0.14% or $1.29 to $935.81 an ounce.

Selected base metal futures were in positive territory on the London Metal Exchange. At 1635 GMT, three-month futures contracts of primary aluminium (up 0.7%), tin (up 0.4%) and nickel (up 0.8%) rose, but lead (down 1.7%), zinc (down 0.6%) and copper (down 0.4%) futures posted declines.

Midcap oil related stocks Amec Foster Wheeler (down 6.98%) and Norstum Oil & Gas (down 4.00%) were among the biggest FTSE 250 fallers, while Asia-focussed Standard Chartered bank (down 5.34%) was the biggest FTSE 100 faller.

Furthermore, Investec downgraded StanChart to ‘hold’ from ‘buy’ in light of the very recent share price performance.

On a more positive note, shares in British Airways and Iberia owner International Consolidated Airlines Group (IAG) jumped 6.21% after Merrill Lynch upgraded it to ‘buy’ from ‘underperform’, as the shares have over-shot on the downside. Rival easyJet (up 1.99%) and aircraft engine manufacturer Rolls-Royce (up 2.68%) also registered decent gains.

Anglo American rebounded from earlier lows after the miner posted a pre-tax loss of $5.5bn after $3.8bn of write-downs since the half year, as it unveiled its promised "radical" overhaul of the business to counter crumbling commodity prices, with more than 6,500 job cuts expected.

The biggest FTSE 100 gainer was Merlin Entertainments (up 3.29%) as it appointed Anne-Françoise Nesmes to its board as chief financial officer from 1 August.