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FTSE rises as BP and Shell up >40% in 5 weeks

Hitting a nine-month high, the FTSE 100 finished the week at the front of the global equities pack, beating its Eurozone and US counterparts thanks to the continued recovery of Shell (LON:RDSA) and BP (LON:BP).

Oil majors saw the UK index enjoy a happy Friday, rising 0.92%, to 6,550.23 – its highest level since the start of March. Thus far, the FTSE recovery has been bolstered by the comeback of value stocks in finance, air travel and commodities, though vaccines, lockdown and political updates have seen even recovering equities fluctuate.

One class that looks to continue their recovery, though, are the oil chips such as Shell and BP. Having seen their prices hit respective two-decade lows a few months ago, an oil price burst and general (perhaps premature) uplift in investor sentiment has seen these equities rally at an unseemly rate for such large companies.

On Friday, BP took the FTSE winner’s crown, rallying 3.92% to 276.95p. This price isn’t an outlier, though, with the company hitting a long-term nadir of 193.44p at the end of October, and rallying by 43.17% since.

Likewise, Shell was hardly shabby with its 3.39% rally, up to 1,402.40p. Having fallen to just 900.00p by the end of October, the company has soared by 55.82% to reach today’s price.  

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Speaking on UK oil stocks on Friday, IG Senior Market Analyst, Joshua Mahony, commented: “Energy stocks are helping to lead the FTSE 100 higher in early trade, with oil prices hitting a fresh nine-month high thanks to the eventual OPEC agreement struck yesterday.”

“With BP and Shell both cutting dividends earlier in the year, they lost favour amongst much of the trading community. However, with crude on the rise, and the reinstatement of dividends coming into play, the catch-up trade is on for the oil majors.”

“While OPEC may have not managed to pass an entire six-month extension to the current production quotas, the tapered approach that will only ever seen 500k change per month does highlight that production will only rise as demand improves.”

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