Oil surged yesterday close to 3.5-year peaks on simmering Mideast tensions and keen US demand, while London stocks rose with drugmaker Shire boosted by a possible takeover battle.
World oil prices extended Wednesday’s gains on the back of data showing a drop in US stockpiles — indicating improved demand — and expectations that a Russia-Opec output cap deal will be kept in place.
The market was also propelled after Saudi Arabia reportedly stated it wanted crude prices to top $80 per barrel as it prepares for a listing of part of its state oil company.
Tensions in the oil-rich Middle East also kept prices elevated.
“WTI and Brent Crude have hit fresh 41-month highs after Saudi Arabia stated they would be happy for oil to reach $80 or $100,” said market analyst David Madden at CMC Markets UK.
As Opec members meet in Saudi Arabia, the group’s largest producer was seen as favouring strengthening the partnership with Russia that has successfully limited production to mop up the glut that had sent oil prices plunging under $30 per barrel in early 2016.
Oil surged to summits last seen in November 2014, with London Brent striking $74.74 per barrel and New York crude touching $69.56.
European equity markets meanwhile diverged amid lingering fears over Syria and a possible China-US trade war, but London moved 0.2% higher despite news of sliding March retail sales.
Across Europe, London’s FTSE 100 rose 0.2% to close at 7,328.92; Frankfurt’s DAX 30 was down 0.2% at 12,567.42, while Paris’CAC 40 gained 0.2% at 5,391.64. The EURO STOXX 50 was down 0.1% at 3,487.10.
The British capital’s benchmark FTSE 100 index was given an early shot in the arm from media reports, later confirmed, that Japan’s Takeda Pharmaceuticals was making a takeover move on Shire.
Shire, which is based in Ireland and listed on the London stock market, saw its share price rocket more than 10% higher.
It gave up much of those gains after Takeda confirmed it had made a takeover bid worth £42bn ($60bn), but that Shire had rejected the offer.
Shire said it had rejected three offers from Takeda, and was still in discussions with the firm about “whether a further, more attractive, proposal may be forthcoming”.
Shire shares shot higher once when Botox maker Allergan said it was considering making an offer as well.
They closed the day 5.9% higher. Allergan shares slumped 6.4% in New York.
Wall Street moved lower, with the Dow down 0.2% in late morning trading, as consumer goods companies tumbled after Procter & Gamble cited “difficult” conditions facing the sector.
Dow member P&G reported essentially flat earnings on slightly higher sales, but executives said the push by retailers to keep prices low was weighing on business.
Chief executive David Taylor vowed to “change at an even faster rate.”
P&G shares fell 2.5%, while Kimberly-Clark and Colgate-Palmolive both dropped more than 2%.
Clorox sank 4.7%.
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