Wednesday 23 May 2018

Oil prices fall as Donald Trump takes aim at oil-exporting cartel

The US President said oil-producing nations were making oil prices “artificially high”.

Donald Trump has criticised oil-exporting nations (Niall Carson/PA)
Donald Trump has criticised oil-exporting nations (Niall Carson/PA)

By Helen Cahill, Press Association City Reporter

Oil prices were hit on Friday after Donald Trump took aim at a cartel of oil-exporting nations.

The US President tweeted the Organisation of the Petroleum Exporting Countries (OPEC), a group representing oil-producing countries, was keeping prices artificially high and their actions “will not be accepted”.

Following the tweet, Brent crude was down 0.32% to $73.33 dollars a barrel.

Jasper Lawler, head of research at London Capital Group, said: “It won’t have escaped Trump’s attention that rising gasoline prices can quickly eclipse any financial benefits to rust belt America from his tax cuts.

“The question is whether Trump has more than bluster on Twitter to impact the oil price. He probably does, but these tools are already in use.

“The US government has already opened up drilling rights on and offshore and US production is soaring as a result, adding supply to the market.”

The FTSE 100 was lifted during the session as sterling slid on comments from Bank of England governor Mark Carney.

The prospect of a rate hike next month waned after Carney said several Brexit-related events would impact rate rises, and there would only be gradual increases.

Against the dollar, sterling fell 0.35% to 1.403. The pound was broadly flat against the euro at 1.14.

Meanwhile, by the market close, London’s blue chip index had risen 39.35 points to 7,368.17.

In UK stocks, Shire’s shares dipped despite Japan’s Takeda upping its bid for the pharmaceutical giant.

Takeda said its new proposal is worth £47 per share, £21 of which is cash and £26 in new Takeda shares.

It values Shire at £42.8 billion, a slight advance on its last offer.

Takeda’s announcement came after Botox maker Allergan confirmed it would not make a bid for the Shire, just a day after saying it was weighing up an offer.

Shire’s shares were down 3.86% or 153.5p to close the day at 3,821.5p.

Shares in consumer goods giant Reckitt Benckiser also slipped when its sales missed analysts’ expectations.

Sales were up 2% on a like-for-like basis at the company, which owns a suite of household brands including Dettol, Clearasil and Gaviscon. Analysts had been expecting a rise of 2.6%.

The company was hit by “significant underperformance” from Scholl. The footcare brand brought down sales in Reckitt Benckiser’s health division, more than offsetting gains from Durex and VMS sales.

By the market close, Reckitt Benckiser’s share price was down 161p to 5,625p.

Value womenswear retailer Bonmarche suffered a drop in sales in the first three months of the year, which analysts pinned on the Beast from the East. Sales fell by 11.1% on a like-for-like basis in the three months to the end of March, with online sales up by 31.2%.

However, Bonmarche said it would still meet its profit targets. Shares closed the day down 0.5p at 90p.

The top risers on the FTSE 100 were CRH up 99p at 2,525p, Smiths Group up 46.5p to 1,618.5p, Standard Chartered up 19.10p to 764.4p, and NMC Health up 92p to 3,688p.

The biggest fallers on the FTSE 100 were Shire down 153.5p to 3,821.5p, Reckitt Benckiser down 161p to 5,625p, GKN down 9.7p to 467.9p, and Smurfit Kappa down 52p to 3,136p.

Press Association

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