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London’s oilers rally as Brent crude continues to bounce back

Last updated: 21:48 03 Feb 2015 AEDT, First published: 22:48 03 Feb 2015 AEDT

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Crude prices have now rallied some 11% in the two days since marking losses for seven consecutive months.

February’s second trading day sees Brent crude 4% higher at US$57 per barrel, similarly US crude futures were up to US$51.20.

It comes amid signs that the oil price collapse has forced tough decisions for producers.

Stats last week showed the biggest ever weekly drop in the industry’s active rig count – with nearly 100 drilling units put on hold.

Similarly, more white flags were waved as Shell, BP and BG all made big reductions to capital investment plans.

Although there has been no joined together OPEC-style talk of curtailing western production, the sum total of reporting season points to an evitable slowing of production growth.

That said, in the crude market we could still merely be seeing a covering of short trades and/or a correction in a bearish trading sequence.  

Given the recent price volatility, and the high level of casino-like speculation, it remains to be seen whether or not the current rally will translate into a lasting recovery for oil.

Nevertheless, however short lived it may be, several London listed oilers have rebounded in step with crude.

On Tuesday, Shell (LON:RDSB) tacked on just over 3% while Tullow (LON:TLW) and BP (LON:BP.) gained 2.8% and 2.55% respectively.

In the FTSE 250 Afren’s (LON:AFR) relief rally continues with the share up another 50% this morning.

Afren was priced to bust prior to Friday’s stay of execution - an aftermarket statement on Friday revealed some US$65mln of due payments had been deferred. The share price has now nearly trebled this week, albeit the market value still languishes in historic terms.  

The broader market, however, is being moved by more than just bottom-feeding speculation.

Premier Oil (LON:PMO), Soco International (LON:SIA) and Ophir (LON:OPHR) were also features on the FTSE 250 leader board. Meanwhile, oil services engineer Hunting (LON:HTG) bounced back 10% on Tuesday, while Petrofac (LON:PFC) and AMEC (LON:AMFW) gained 4.6% and 3.8% each.

In the small cap market North America focussed Empyrean (LON:EME) and Caza Oil & Gas (LON:CAZ) gained 14% and 9%.

Utah focussed shale junior Rose Petroleum (LON:ROSE) advanced 12% after revealing the success of its first well in the Mancos shale – its drill programme also unearthed a conventional discovery, which will be fast-tracked to production.

Also in Utah a quite different unconventional oil company TomCo (LON:TOM) was up around 8% after it resolved an permitting objection from an environmental group.

North Sea oil firms Xcite (LON:XEL), Parkmead (LON:PMG), Ithaca (LON:IAE) and Faroe (LON:FPM) gained between 14% and 8.5%.

Falkland Oil & Gas (LON:FOGL) rallied 13%, while New Zealand focussed Mosman (LON:MSMN) was up 14%.

Russia based junior PetroNeft (LON:PTR) climbed nearly 9% after a new horizontal well came online with production rates ahead of expectations.

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