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MARKET REPORT: Traders tipping oil to return to $100 a barrel

The recent oil rally could have even further to go, according to the world’s top commodity traders, who think prices could touch $100 a barrel again.

Executives at Trafigura, Vitol, Glencore and investment bank Goldman Sachs all believe Brent crude hitting triple figures is a real possibility. 

A big driver will be drastic investment cuts made by big energy companies, who are trying to repair finances in the wake of Covid at the same time as ploughing cash into green energy.

Oil rally: Prices at the pumps look set to rise with executives at Trafigura, Vitol, Glencore and investment bank Goldman Sachs all tipping oil to touch $100 a barrel again

But they are making these changes at a time when demand for oil is set to reach pre-Covid levels. This could lead to a spike in prices. 

Jeremy Weir, executive chairman of Trafigura, told a Financial Times conference that he was ‘concerned’ by oil companies’ lack of spending.

And Alex Sanna, Glencore’s top oil trader, said that cutting supply without addressing demand for oil ‘is when you can get price dislocations’.

Oil last hit $100 a barrel in 2014, shortly before it nosedived in a commodities slump. It was at almost $74 last night – its highest since November 2018.

Stock Watch - Westminster Group

Westminster Group shot higher after it secured a 20-year contract to provide security services at five airports in the Democratic Republic of Congo.

It will earn around £4.3million in the first year, and this is expected to rise when the pandemic has passed and flights are more frequent.

Westminster said it won the work because of its takeover of French business Euro Ops in 2019. 

The AIM-listed company will be responsible for hiring and running ground security at one national and four international airports.

Shares surged up 41 per cent, or 1.68p, to 5.78p.

It dropped as low as $19 in April 2020 when lockdowns took cars off the road, grounded flights and shut factories for months.

Prices rose steadily until a string of vaccine announcements in November – and have shot higher since then.

Riding the latest jump in oil prices, Shell rose 2.3 per cent, or 32.6p, to 1426.2p last night, while BP climbed 0.7 per cent, or 2.3p, to 332.7p.

Boosted by the gains among the energy heavyweights, the FTSE 100 hit a new 16-month high during trading before closing up 0.4 per cent, or 25.80 points, to 7172.48.

It was also nudged higher by a rally in BT shares, which finished up 2.9 per cent, a rise of 5.5p, at 197.35p.

BT rose after brokers at Societe Generale raised the target price on its stock to 235p, days after it emerged that Altice, the telecoms giant founded by French billionaire Patrick Drahi, took a more-than 12 per cent stake in the group.

Equipment rental group Ash-tead – up 1.6 per cent, or 30p, to 5116p – was another blue-chip riser.

It said turnover grew by 23 per cent in the three months to April as the economic recovery in the US gained pace and that sales for the year as a whole should rise by as much as 9 per cent this year.

More than 90 per cent of its business is in North America, where it trades under the name Sunbelt Rentals.

In the UK, the company – Britain’s largest provider of traffic cones – has been inundated with work supplying Covid testing centres with portable tower lights and mobile power generators.

Vaccine-maker Astrazeneca had a more difficult day. It slid 0.1 per cent, or 5p, to 8343p after a trial found a Covid antibody treatment failed to help those exposed to the virus. 

The treatments involve giving patients antibodies to boost their immune system and stop them developing a virus they have been exposed to. But Astra’s treatment was not found to be any better than a placebo.

Modest rebounds in Upper Crust-owner SSP’s shares, which rose 3 per cent, or 9.4p, to 325.5p, Wagamama-owner the Restaurant Group – up 1.8 per cent, or 2.2p, to 125.6p – and Cineworld, which climbed 1.3 per cent, or 1.14p, to 88p, failed to keep the FTSE 250 in the black.

All were pummelled anew by the Government’s decision to extend the lockdown in England by four weeks. The 250 dropped 0.5 per cent, or 112.79 points, to 22,631.72.

Digital agency Kin & Carta was the top riser on the FTSE All-Share after estimating its revenues would be about 10 per cent higher to £150million in the year to July 31.

The company designs websites and consulting services for how companies can improve their presence online, with clients such as Visa, Lexus, and Unilever (up 1 per cent, or 42.5p, to 4337.5p). Kin & Karta rose 23.7 per cent, or 47p, to 245p.

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