The FTSE 100 was up over 1% on Monday following a rebound in benchmark Brent Crude to $113 per barrel.
A rebound from last week’s heavy selling continued into Monday’ session as concerns over oil supply saw the energy complex rise, taking the FTSE 100’s oil companies with it.
Harbour Energy, BP and Shell shares rose 4.3% to 347p, 4.3% to 401p and 3.8% to 2,203.2p, respectively.
“A small bounce back in the oil price was enough to give BP and Shell a lift and provide welcome support to the FTSE 100 index,” said AJ Bell investment director Russ Mould.
“Oil supplies have been watched closely in recent weeks amid concerns about a slowdown in the global economy.”
“Fundamentally supplies continue to be tight and there is still enough economic activity to stop oil prices slumping. However, lingering recession fears could act as a ceiling on the oil price so we might not see the black stuff race ahead in value too much from current levels.”
The support oil can provide the FTSE 100 was highlighted by the stark difference in today’s performance of the German DAX – down 0.2% – and FTSE 100.
Global recession
The rise in UK stocks came even though warnings of a global recession continued with Larry Summers saying risk of recession are rising.
However, there is now an argument a recession is largely priced into stocks and central banks may not be as aggressive with rates rises through the rest of 2022 as previously thought.