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Oil giants hit amid fears of drop in demand

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PUBLISHED: 25/07/2016

The FTSE 100 index was off 20.4 points to 6710.13, as Brent crude sunk 1.9% to 44.83 US dollars (£37.50) a barrel after a report from Barclays warned global oil demand was down amid lacklustre growth from the global economy.

BP dropped 2.6%, or 11.8p, to 440.4p ahead of its interim results on Tuesday, while rival Royal Dutch Shell was also languishing in the red, slipping 2.5%, or 54.5p, to 2093.5p.

Sterling was also under pressure after a report from the Confederation of British Industry (CBI) said business optimism had deteriorated at its fastest pace since January 2009 following the Brexit vote.

The pound paired back gains against the dollar to rise 0.1% to 1.312 US dollars, after the CBI’s Industrial Trends Survey revealed optimism had fallen sharply in the wake of the EU referendum result, while expectations that total new orders will rise are at their lowest level since January 2012.

It found 52% of firms were less optimistic about the general business situation compared to three months ago, while 5% of businesses were more optimistic, leaving a balance of minus 47%.

But the report – which surveyed 506 manufacturers between June 27 and July 13 – said output had risen across the sector at its fastest pace in two years.

The update comes after last week’s closely-watched Markit Flash UK Composite Output Index showed the UK economy has slumped at its fastest rate since the financial crisis in the wake of Britain voting to leave the European Union.

The pound was also marginally up against the euro at 1.195 euro.

The biggest risers on the FTSE 100 Index were 3I Group up 19.5p to 610.5p, Next up 133p to 5005p, Morrison’s up 3.9p to 183.8p, Legal & General up 4p to 199.4p.

The biggest fallers were Randgold Resources down 300p to 8550p, BP down 11.8p to 440.4p, Royal Dutch Shell A down 53.5p to 2038.5p, Royal Dutch Shell B down 54.5p to 2093.5p.

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