MARKET WRAP: FTSE rallies, Oil higher as DoE denies plans to release reserves

imageEconomy9 hours ago (Oct 07, 2021 16:37)

© Reuters.

Key Points

  • FTSE 100 closing price of 7,079.89, +1.2%
  • Miners rally to lift FTSE
  • Natwest falls as it admits to money laundering
  • Oil reverses drop as DoE has no plans to tap SPR
  • US nat gas drops but inventories still historically low
  • USD softer with focus on NFP
  • Bitcoin remains above $54,000

By Samuel Indyk – The FTSE 100 surged higher on Thursday as large-cap mining stocks lifted the index back towards 7,100.

Anglo American (LON:AAL), Antofagasta (LON:ANTO), Rio Tinto (LON:RIO), and BHP (LON:BHPB) were near the top of the blue-chip index as higher metals prices lifted company shares.

Royal Dutch Shell (LON:RDSa) was in focus as the company detailed the impact Hurricane Ida had on profit in the last quarter, while adding that cash flow likely soared as oil prices trade near multiyear highs.

“Basically a wall of cash looks set to come the company’s way thanks to the recent surge in energy prices,” said AJ Bell Investment Director Russ Mould. “Like other large energy companies, Shell has pursued a more streamlined approach, slashing costs and spending, and selling non-core assets in recent years as it looks to put its finances on a sustainable footing.”

NatWest (LON:NWG) shares dropped after the company pleaded guilty to failing to prevent money laundering of £400 million. The bank is the first in Britain to admit to a criminal offence of this sort and will now likely face a large fine.

WTI and Brent crude futures had been lower on Thursday after comments from US Energy Secretary Jennifer Granholm on Wednesday. Granholm said the US was considering tapping the strategic petroleum reserve (SPR) to help lower gasoline prices. However, later on Thursday a spokesperson for the Department of Energy (DoE) said there are no plans to tap into strategic stocks or pursue a ban on US crude exports. This helped oil move back into positive territory with Brent trading back above $82/barrel.

Natural Gas was again in focus, this time after the weekly storage report from the Energy Information Administration (EIA). Working gas in storage increased by 118 Bcf in the latest week, above the expected 105 Bcf, according to the EIA. However, stocks were 532 Bcf less than this time last year and 176 Bcf below the five-year average.

The USD edged lower with focus turning to Friday’s Nonfarm Payrolls report, which is expected to give the green light to the Fed to begin tapering asset purchases from next month. A deal between Republicans and Democrats to temporarily lift the government debt ceiling was agreed upon, putting a temporary end to the talk about a US debt default.

GBP/USD rose back above 1.36 and EUR/GBP fell below 0.8500 after comments on inflation from new Bank of England Chief Economist Huw Pill.

“The magnitude and duration of the transient inflation spike is proving greater than expected,” Pill said in comments to MPs.

Bitcoin is proving to be remarkably resilient following the recent breakout above $50,000.

“October is becoming a great month for cryptos after both Fed Chair Powell and SEC’s Gensler stated they don’t have any plans to ban cryptocurrencies,” wrote OANDA Senior Market Analyst Edward Moya. “Bitcoin mania is running wild and the current momentum could support a run towards the $60,000 level.”


Subscribe to UK here


MARKET WRAP: FTSE rallies, Oil higher as DoE denies plans to release reserves

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Please enter your comment!
Please enter your name here