Oil remained the dominant factor in the minds of traders on Tuesday as conflicting reports throughout the day left the price of a barrel of Brent crude fluttering.
The highs of Monday, with oil getting to more than 70 dollars a barrel in the first trading since the attack on a refinery and oil field in Saudi Arabia, dissipated as proclamations from US President Donald Trump and the Saudis that they would tap into reserves calmed fears.
Reports also came through that refineries in India and China continued to receive their orders.
Any indication that Trump could retaliate against Iran could send oil prices higher once againFiona Cincotta, City Index
And another report said that bosses at Aramco – Saudi’s state-owned oil business – were confident it will be back online quicker than first thought.
This last suggestion, first reported by Reuters, was enough to convince traders the worst was over, sending Brent crude down 5% to 65.55 dollars a barrel.
As a result of the fall in oil prices, the FTSE 100 closed down slightly – off 1.01 points at 7,320.4 – but could have fallen further had shares in BP and Royal Dutch Shell not recovered heavy falls in the early afternoon.
BP lost 7.6p, closing at 517p, and Royal Dutch Shell saw its “A” shares up 3.5p at 2,334.5p and its “B” shares up 9.5p at 2,332p – however, both traded lower through most of the afternoon.
By comparison, British Airways owner IAG saw a spike in its share price around the same time – having previously fallen due to fears among investors that fuel prices could rise.
In the end, IAG closed out the day down 3.5p at 441.6p.
Throw into the mix the pound rising against the dollar – which tends to send the FTSE 100 down – and it goes some way to explaining the conflicting movements in shares.
A pound at close was worth 1.2493 dollars.
Fiona Cincotta, financial analyst at City Index, said: “Oil is experiencing heightened levels of volatility and we don’t expect this to end soon. Traders will remain fixated on recovery time for the production facility, but also on what Trump will do next. Any indication that Trump could retaliate against Iran could send oil prices higher once again.”
In company news, potash miner Sirius Minerals warned 1,200 jobs could be at risk after bosses admitted it is struggling to raise the £400 million needed to continue development at its Woodsmith site in North Yorkshire.
Shares plunged more than 50%, or 5.33p, to 4.666p.
Ocado’s retail business saw sales accelerate in the third quarter as weekly customer orders continued to rise.
The results were the first for Ocado Retail, the online grocer’s retail arm created as part of its £750 million joint venture with Marks & Spencer.
Shares closed up 1p at 1,350.5p.
Struggling recruiter Staffline saw shares plummet 22.7%, or 35p, to 119p after its second profit warning in four months.
Bosses revealed it swung to a first-half loss following a slowdown in new contracts.
And airport services and support firm John Menzies has been taken to task by shareholders after they voted down plans to cancel preference shares and nearly a fifth rebelled against pay proposals.
Shares closed down 3.5p at 401.5p.
The biggest risers on the FTSE 100 were Aveva up 114p at 3,690p; Relx up 53p at 1,886p; Rentokil up 12.2p at 443.9p; Sage up 17.2p at 667.8p and Halma up 43.5p at 1,990p.
The biggest fallers were TUI down 40.8p at 841.6p; Evraz down 20.1p at 497.9p; Mondi down 51p at 1,625p; Smurfit Kappa down 78p at 2,528p and Barclays down 4.28p at 149.2p.