WEDNESDAY MARKET CLOSE: Oil prices crash on US inventory data

The London market got a double boost as oil prices slumped to their lowest level in nine months and the pound dropped like a stone following the latest comments from the Bank of England.

It followed a surprise rise in US oil inventories, which had built-up in anticipation of disruption from conflicts in the Middle East.

Ric Spooner, chief market analyst of CMC Markets, said: “Brent prices have been in a steady decline and I think the background of that is that the market is forming the view that any supply disruptions are not on the immediate horizon.”

Despite ex-dividend factors that knocked more than 20 points off the index’s gains, the FTSE 100 was 24.26 points higher at 6,656.68. Among the beneficiaries of cheaper fuel, EasyJet was flying 2.5 per cent higher at 1,290p.

Builder Barratt Developments was also on the risers’ board, as a dovish inflation report showing that the Bank of England was not expecting prices to pick up in the medium term was interpreted as being positive for mortgage borrowers. Barratt was 9.6p higher at 350.8p and Persimmon added 20p at 1,296p.

Motor insurance stocks were under pressure after Admiral said it was still too early to call a turning point in the market after two years of falling premiums. The company reported a rise in half-year profits but shares fell more than 5 per cent, down 79p to 1,371p as analysts cautioned over the outlook for the sector. Second tier rival Direct Line Insurance was off 15.3p to 281.1p.

Elsewhere, investors welcomed an encouraging update from outsourcing firm G4S. Its shares were top of the blue chip leaderboard, up 13.7p at 273.5p, but rival Serco fell 16.2p to 314.3p as its results from the previous day looked worse by comparison.