Rumours that driller Tullow Oil is a takeover target following its recent share price slide helped it gain almost 10 per cent on the rebound.
Shares in the explorer lifted 34p to 399p, with Shell named as the prospective buyer despite it announcing its own cutbacks last week.
Jasper Lawler, market analyst at CMC, said: “Tullow Oil’s share price has taken a battering alongside the price of oil so if there’s a belief that oil prices are close to a bottom and that Tullow’s assets have value, now is the best time for Shell to make a bid. Shell is in the process of trimming its assets and reducing capital expenditure in response to falling oil prices so a bid would be somewhat counter to those aims.”
It came as the oil price, which has fallen by more than half since last summer, showed signs of a recovery as the barrel of Brent crude topped $55 during the session, having dipped close to $45 during January.
Shell was up 66p to 2,170.5p. BP and BG Group also benefited, the former rising 13.25p to 437.7p while BG climbed 5 per cent or 47.3p to 934.2p.
The sector helped the FTSE 100 add 33.15 at 6,782.55 for the session.
But airline investors were jittery despite Dublin-based Ryanair hiking its profit guidance for the current financial year. Traders were spooked by a warning that they should expect “modest” growth in the following financial year as low oil prices will benefit rivals who bought less fuel in advance, intensifying downward pressure on fares.
In London, rival EasyJet was the biggest faller in the top flight, down 6 per cent, or 120p, to 1,742p. British Airways owner IAG was down 15p to 529.5p.
The read-across to the rest of the travel sector saw cruise ship operator Carnival lose 76p to 2,921p and travel agency group Tui fall 2p to 1,175p.