European stocks down on oil concerns

Demand for crude at its weakest in 12 years prompting drop in oil and gas stocks

A drop in the value of oil and gas companies sent European stocks down for a third day after OPEC said it sees demand for crude in 2015 at the weakest level in 12 years.

The Stoxx Europe 600 Index declined 0.3 percent to 339.32 at the close of trading, erasing an earlier advance of as much as 0.9 percent.

In Ireland, the Iseq Overall Index declined by 0.4 per cent to 5,147.95. Dublin Aer Lingus closed up 1.6 per cent yesterday at €1.85 after shareholders approved the payment of €190 million towards the resolution of a workers' pension scheme. Rival Ryanair continued its strong recent run, closing up 0.5 per cent at €9.457.

Irish Continental Group finished the day 2.4 per cent higher at €3.175.


The ferry operator doesn’t hedge its fuel requirements and has benefitted from the recent steady decline in oil and gas prices globally.

Exploration stocks fared less well. Providence Resources fell by just under 20 per cent to 78 cent while Tullow Oil finished lower by 1.2 per cent at €4.90. Europe A measure of energy stocks retreated to a three-year low, posting the worst performance among 19 industry groups on the Stoxx 600.

Royal Dutch Shell Plc, BP Plc and Total SA lost more than 1 percent.

OPEC cut the forecast for how much crude oil it will need to provide in 2015 amid surging US shale supplies and lower estimates for global consumption. That sent Brent to its lowest price in more than five years.

European oil and gas shares have tumbled 27 per cent from a high in June. Greece’s benchmark gauge fell 1 per cent, extending losses after tumbling on Tuesday the most since 1987.

The prospect of a snap parliamentary election has fuelled speculation that an anti-austerity party may gain more power in domestic politics.

Banks were the biggest drag on the index, with Eurobank Ergasias SA down 3.8 per cent, Piraeus Bank SA losing 3.6 per cent, and National Bank of Greece SA dropping 1.8 percent to its lowest price since at least 1992.

The rout spread across European stocks and spooked investors, with a measure of euro-area volatility yesterday surging the most in nine months. London UK stocks fell, erasing an earlier gain in the FTSE 100 Index, after OPEC said it sees demand for crude in 2015 at the weakest level in 12 years. The news sent mining and commodity stocks lower.

Royal Dutch Shell Plc, BP Plc, Rio Tinto Plc, Petrofac Ltd and Tullow Oil Plc lost more than 1.5 percent.

European oil and gas shares have tumbled 27 per cent from a high in June.

The FTSE 100 Index lost 29.43 points, or 0.5 per cent, to 6,500.04 at the close in London. The broader FTSE All-Share Index retreated 0.3 per cent.

New York US stocks fell in early trading, extending the week’s decline for the Standard and Poor’s 500 Index, as energy shares renewed a selloff after OPEC cut its forecast on 2015 demand for crude.

ConocoPhillips, Exxon Mobil Corp and Chevron Corp lost more than 2.2 percent. The five worst performers in the SandP 500 were energy companies.

Yum! Brands Inc sank 4.8 percent after cutting its 2014 profit forecast amid a health scare in China.

American Airlines Group Inc and United Continental Holdings Inc rose at least 2.9 per cent after an industry group said that global airlines will make record profit next year.

The SandP 500 lost 0.8 per cent to 2,044.06 at 12:58 pm in New York. The benchmark gauge has slumped 1.5 per cent this week after reaching a record on December 5th.

– Additional reporting by Bloomberg

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times