Market Report: Beleaguered oil stocks take another beating

A bruising day for Brent crude meant another beating for the already beleaguered oil stocks.

Stockpiles of American crude rose for the seventh consecutive week and more than expected, with concerns of a continued oversupply taking a big chunk out of the oil price as Brent slid $1.37 to $46.07 a barrel. That took its toll on the heavyweight oilers, with BP down 4.6p to 377.9p, Shell 24.5p worse off at 1,667.5p, while its takeover target BG Group gained 0.5p to 1,000.5p.

Oil firms, such as Shell and BG, are looking to bulk up to protect themselves against a contracted period of oil price pressure. Across the pond, Anadarko Petroleum tried and failed as it revealed a rejected takeover bid for rival Apache.

The shockwaves were felt on the FTSE 250, with oil-focused companies littering the biggest fallers list.

Tullow Oil, which is hunting for oil in new frontiers, dropped 16p to 197.6p as it slashed its exploration budget for next year. Elsewhere on the mid-cap index, embattled oil services firms Hunting tanked 15.5p to 329.4p and Amec Foster Wheeler slumped 17p to 495p.

The outlook wasn’t much brighter for industrial metals, with the prices of zinc, lead and copper all languishing at their lowest in years, which sent miners down even further. Iron ore giant BHP Billiton was off 22.8p at 923.7p as it counts the cost of the burst dam in Brazil which destroyed a nearby town.

The drubbing for commodities, along with the biggest one-day fall in seven years from Sainsbury’s, which crashed 19.3p to 253.3p, took the edge off a mini-revival from the FTSE 100, which finished up 21.92 at 6,297.2.

Broker Liberum knocked Jimmy Choo down 3p to 152p by downgrading the luxury fashion house to hold.

On AIM, Australian oil firm Oilex plummeted by more than 60 per cent, down 0.88p to 0.55p as investor Zeta Resources failed to stump up funding in exchange for a near-20 per cent stake, which will delay the drilling of its latest well in India. Worse still, Oilex said Zeta alleged it “failed to disclose material information” before its original investment. Oilex rejected the allegations.