Oil hit a new high for the year this morning after forecasts indicated an increase in global consumption, providing a fillip for commodity stocks and fuelling another morning of gains for the FTSE 100.
Benchmark crude for July delivery was up by more than one US dollar to $71.42 in New York, adding to gains on speculation that the economy could be on the verge of recovery. London Brent crude gained 85 cents to $70.47.
The US Energy Department predicted average oil prices of $67 a barrel in the second half of 2009. The American Petroleum Institute (API) reported a fall of six million barrels in US crude stocks in the week ended June 5, beating analysts’ expectations for a 400,000-barrel decline.
Oil has more than doubled from the low-$30s level it hit during the winter on optimism of an economic recovery that would lead to higher oil demand, although prices are still more than 50 per cent below the high of $147.27 touched last July.
The UK’s leading share index was up 80.25 points by mid morning, to 4,485.04.
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Eurasian Natural Resources was the top gainer among the commodities dominated FTSE risers, putting on 49.5p or 7.33 per cent to 725p. Xstrata added 44.5p or 6.17 per cent to 766p.
A statement from JPMorgan that it remains overweight on banks was enough to give the sector a lift, with RBS adding 2.2p, or 6.1 per cent, to 38.3p.
Sterling edged up a couple of cents against the dollar, trading at $1.6400 compared to $1.6269 at the previous close. One euro was worth 86p.