Britain’s biggest oil and commodities stocks are jumping in the first two hours of trading this morning after the UK government announced a major support deal for the sector and a major resources group revealed that it is not going to stop digging, no matter how bad the collapse in prices are.
Platinum producer Anglo American shares are up nearly 11% after production climbed by 5% in 2015despite platinum prices hitting a 7-year low at the end of last year.
Other commodities stocks followed suit. Glencore rose by over 1% while Vedanta was up by 9%.
Tullow Oil stocks are around 7.6% while the share price for Drax Group is also one of the leaders of the FTSE 100 with a 3.45% rise as of 10 a.m. GMT.
BP stocks are up near 2% while Shell is up by 2.3%.
This morning, the British government announced that it will deliver a £250 million ($350 million) package of funding to boost the oil industry in northeast Scotland, as the sector continually takes a hammering from significantly low oil prices.
“Oil and gas is a crucial sector not just for the northeast of Scotland but for the whole of the UK,” said Britain’s Scottish Secretary David Mundell in a statement.
“I know it’s a very tough time for people who work in the industry and their families and I am determined the UK government will do what it can to support them.”
Oil prices are around the $32 per barrel mark — 70% lower than what it was in the summer of 2014. Other commodities such as platinum has slumped to 7-year lows while copper prices, seen as a global barometer of industrial demand, plunged to a 5.5 year low last week.
This has caused major damage to the oil and commodities industry and in particular the stock prices.
For example, Anglo American, the highest riser on the FTSE 100 today, has seen it’s stock price crater by over 75% in a year:
Shell’s share price, for example, has also fallen by over 30% in a year due to the collapse in oil prices:
So today’s rally is a slight relief but not necessarily the beginning of the end of the global oil and commodities route.