News

November 03, 2008

That Was The Week That Was … In The UK Oil Equities Markets

By Daniel O’Sullivan

Even global economic apocalypse gets boring after a while. As geriatric-baiting BBC radio DJs have shoved the credit crunch off the UK front pages, so too the markets finally seem to have grown jaded with panic. At the time of writing, benchmark US crude is bouncing around the US$68 per barrel mark, up some 11 per cent from a week ago. But the main market oil and gas sector has bounced considerably more than this, up 17 per cent as a whole through the week. Perhaps punters realised that if the absolute worst - think crude below US$50 per barrel – wasn’t actually going to happen, then in fact that meant there was a lot of value lying on the table at the start of this week. Interest was, of course, also piqued by the two big boys, BP and Shell, both reporting their third quarter results on Tuesday and Thursday - they went on to finish the week up respectively 15 per cent at 507p, and 16 per cent at 1,659p.

Of course, everyone realises that the ridiculous profits both reported will drop just as dramatically in the current quarter as they spiked in the previous, but both companies had other messages to peddle. For BP, upstream production increased marginally year-on-year despite US hurricane shut-ins, and the troubled US refining arm turned profitable once again. Meanwhile, chief executive Tony Hayward was swift to compare how well-placed BP is as the oil price drops, set against rivals with large...