Danni Hewson, head of financial analysis at AJ Bell, said: “An oil price jump often leads to outperformance from London-listed oil giants BP and Shell, but despite Brent crude skipping past $108 a barrel today both companies’ share prices fell on news that Shell has agreed to buy Canadian energy company ARC Resources.
“Laying out huge sums of cash never goes down well with investors, even if it will help future-proof Shell’s oil and gas output for years to come and further diversifies its interests away from the Middle East. So it’s understandable that Shell’s shares have come under pressure.
“Shell buying ARC puts to bed any hopes it will also buy BP any time soon. Shell was rumoured to be interested in BP last year, but nothing came of it. Shell will now be busy getting ARC over the line and then bedding in the acquisition to be thinking about taking on another multi-billion-pound deal.
“The current obsession with the price of oil has catapulted these two heavyweights back into the headlines and many investors may be looking at oil stocks as a way of mitigating the potential impact of a global downturn. But the future is much less clear with long-term energy strategy and security creating tension.”
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