Crude oil futures were lifted by an upward movement in equity markets today and a weaker US dollar, which put the prices at two year highs.
Gains in oil futures were curbed by projections of another rise in US crude oil stockpiles. Analysts polled by Bloomberg News expected to see a gain of 1.75 million barrels in this week’s reports, which would put inventories at the highest level since May 2009.
The American Petroleum Institute (API) and the US Energy Department will release their inventories data today and on Wednesday respectively.
Another rise in stockpiles would signal further decline in demand from the US, the world’s largest energy consumer.
Last week’s data from the US Energy Department showed that oil supplies increased by 2 million barrels in the previous week.
The FTSE 100 was buoyant in early afternoon after results from mobile operator Vodafone (LON:VOD) and the UK's second largest bank Barclays (LON:BARC) received a positive response in the markets, driving the blue chip index up 0.8%.
Investors are looking to today’s updates on the ABC News consumer confidence index and US wholesale inventories.
Oil prices got a boost from last week's decision by the Federal Reserve to expand the quantitative easing programme by another US$600 billion in an attempt to spur the slowing economic recovery, leading to expectations of an increase in energy demand.
US light, sweet crude for December delivery rose to US$87.40/barrel, while January crude reached US$88.03/barrel on the New York Mercantile Exchange (NYMEX).
On the ICE Exchange, December Brent Crude advanced to US$88.78/barrel, while Brent for January delivery last traded at US$88.98/barrel.
BP (LON:BP) led the blue chip oil and gas producers with a 2.8% gain, while fellow supermajor Shell (LON:RDSB) posted a small gain, as did BG Group (LON:BG) and Cairn Energy (LON:CNE).
Tullow Oil (LON:TLW) rose 1.1%.
Amec (LON:AMEC) declined 1.2%. Another oil and gas engineering firm Petrofac (LON:PFC) did better, climbing 1%.
JKX Oil & Gas (LON:JKX) led the midcaps, advancing 4.1%. Soco International (LON:SIA) and Melrose Resources (LON:MRS) followed with gains of 1.3%. Dragon Oil (LON:DGO) and Premier Oil (LON:PMO) stood just above the opening levels.
Heritage Oil (LON:HOIL) and Salamander Energy (LON:SMDR) declined marginally.
Services companies were on the rise. Wood Group (LON:WG) tacked on 1.3% and Wellstream Holdings (LON:WSM) posted a small gain.
EU focused oil and gas explorer and producer Northern Petroleum (LON:NOP) was among the top performing small caps, surging 15%. US focused Caza Oil & Gas (LON:CAZA, TSX:CAZ) and Nighthawk Energy (LON:HAWK) followed with gains of 10%.
Chinese coal bed methane (CBM) gas producer Green Dragon Gas (LON:GDG) also did well, climbing 5%.