A surprise drop in US oil inventories has pushed the crude price higher - to around $111 a barrel - and given added support to oil shares.
The 3.2m barrel weekly fall in US stocks - compared with forecasts of a 2.2m drop - pushed crude prices higher, as did further weakness in the dollar.
So Cairn Energy, which had fallen yesterday on worries about the completion date for a pipeline in India, recovered 127p to £29.60, making it the top riser in the FTSE 100.
ABN Amro explained in a note: "Reuters carried a report yesterday quoting a senior official from Larsen and Toubro (the company contracted to lay the Rajasthan pipeline) that it would not be complete until December 2009, in contrast to L&T's previous June 2009 target and making Cairn's plans to flow first oil from Mangala in 2H09 look optimistic.
"This appears to have had an impact on the shares yesterday, down 5% versus a 2.5% fall for the UK E&P sector. However, overnight, L&T's President (Operations) has been quoted in further press articles saying that the pipeline would be commissioned by June 2009, with additional spur lines and land restoration works being completed by December 2009. As such, yesterday's initial reports look misinterpreted at best and the share price fall looks overdone."
The oil price rise also lifted BG Group 40p to £12.36, BP 8.5p to 545.5p, and Tullow Oil 9.5p to 665p.
But with an opening fall on Wall Street, the FTSE 100 has edged lower, down 6.3 points to 5983.9.
Financials are among the biggest losers, with insurer Admiral down 36.5p at 759.5p, Standard Life 11.75p lower at 253.25p and HBOS down 23p at 526.5p after a downgrade from Credit Suisse.
Finally, apropos of nothing, comes a there-but-for-the-grace-of-God moment, courtesy of Here is the City and YouTube.
