MARKET REPORT: Oil price falls as Opec mulls production hike

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Oil shares weighed on the stock market in London yesterday as the price of crude fell to its lowest level for ten months.

North Sea producer Harbour Energy fell 8.5 per cent, or 27.9p, to 299.5p, and global giants BP (down 3.8 per cent, or 17.9p, to 458.15p) and Shell (down 3.1 per cent, or 72p, to 2272.5p) were also on the slide.

The sell-off came as the price of oil was sent tumbling by concerns about Covid lockdowns in China and reports that Saudi Arabia and other Opec producers are discussing an output increase.

Crude crunch: North Sea producer Harbour Energy fell 8.5% after the price of oil tumbled on concerns about Covid lockdowns in China and reports Opec is discussing an output increase

Crude crunch: North Sea producer Harbour Energy fell 8.5% after the price of oil tumbled on concerns about Covid lockdowns in China and reports Opec is discussing an output increase

Brent crude fell more than 5 per cent to below $83 a barrel for the first time since January before clawing back some of its losses.

Motorists will be hoping this leads to lower prices at the pumps, while any drop in inflation will also be welcomed.

But the slide dragged the FTSE 100 down 0.12 per cent, or 8.67 points, to 7376.85 on a slow start to the week in London. 

The FTSE 250 fared better, rising 0.68 per cent, or 130.3 points, to 19,413.35. Michael Hewson, chief market analyst at CMC Markets UK (flat at 232p), said: ‘It’s been a lacklustre start to the week, for markets in Europe, after an Asia session which was dominated by concern that Chinese authorities will have to implement further lockdowns, after the country reported its first Covid related deaths since April.

‘Consequently, we’ve seen sharp declines in the price of crude oil and base metals on concerns over weaker demand, which has acted as a drag on the basic resources and the energy sector.’

Compass, the world’s largest catering group, was also on the slide yesterday despite an upbeat set of results.

The company said a 37.5 per cent rise in revenues to £25.8billion in the 12 months to the end of September took them back above Covid levels. Profits more than tripled from £464million to £1.5billion.

Stock Watch – Pod Point

Pod Point slammed into reverse after orders of electric vehicle charging points were delayed.

The group, which installs charging points at homes and for firms including Tesco, said supply chain issues meant fewer electric cars were being delivered in the UK.

That has hit demand for its charging points, denting revenues. Pod Point said it expects to make a loss of around £7million this year and a similar one in 2023. Shares tumbled 5.5 per cent, or 4.2 per cent, or 72p.

Compass operates in 40 countries and has 500,000 staff including 50,000 in Britain where it works in school, university and office canteens as well as at sporting events such as Wimbledon.

The company said it was ‘significantly disrupted’ by Covid but has ‘recovered well and learned from the pandemic’.

Compass announced a £250million share buyback programme having completed a £500million repurchase scheme.

The company also hiked its annual dividend payment by 125 per cent, meaning shareholders will pocket 31.5p a share. But shares fell 1.4 per cent, or 26.5p, to 1824p.

Diploma inched up 2.6 per cent, or 74p, to 2874p following a year of successful takeovers.

The technical products supplier hailed its seven ‘strategically important acquisitions’ over the year, including the Australian business Anti-Corrosion Technology (ACT), at a cost of £187million. 

Diploma’s revenue soared by 29 per cent to £1billion in the year to September and its profit rose to £129.5million in the period, up from £96.6million a year earlier.

The group’s results saw RBC raise the target price to 2700p from 2450p.

Insurance giant Beazley gained 3.3 per cent, or 20.5p, to 643.5p after Berenberg and Morgan Stanley raised its target price.

Over at Keywords Studios, the video games developer enjoyed a positive second half of the year thanks to the strong dollar.

The group now expects its profit and revenue for the year to be ‘comfortably ahead’ of what analysts had predicted.

Keywords said its revenue of £586million will be ahead of the market range of £549million to £581million, while a profit of more than £96million is on course to exceed estimates of £84million to £91million.

The group also expects its results for next year to be at the top end of analyst expectations. Shares rose 2.4 per cent, or 64p, to 2774p.

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