Oil continues to edge up, even though the gains were pared by reports that Saudi Arabia had increased output by 500,000 barrels a day. This however is not much in the grand scheme of things, where world demand is 85m barrels a day.
So oil companies are still in demand, with Cairn Energy up 131p to £34.74, the biggest riser in the FTSE 100.
Analysts at Citigroup are convinced dear oil is here to stay. They said in a note today: "A week might be a long time in politics, but is seemingly nothing compared to two days in oil - after last week which saw prices spike $16 a barrel over two days.
"When the likes of George Soros are calling oil a bubble it is hard not to entertain the idea. However, we continue to see fundamental reasons behind the ongoing upward trending of oil prices, driven by the continued erosion of non-Opec supply estimates, and the fact that demand, while softening, is by no means falling low enough to materially offset this tightening supply. Our long-term forecast goes to $100 a barrel, a level at which we believe the market is content that the supply and demand can exist in harmony."
Citi has upgraded most of the companies in the sector, including Cairn, Tullow Oil - up 19.5p at 938.5p - and Soco International - 58p better at £19.24.
The deal for mining group Kazakhmys to increase its stake in rival Eurasian Natural Resources Corporation to 22.3% has been well received. Kazakhmys closed up 37p at £16.64, while ENRC is 38p better at £13.63.
A week ago Kazakhmys was keen to suggest to anyone who asked that its 14.6% stake in ENRC was not a long-term investment, but that no quick decisions would be taken. Now it seems to have decided, not only to increase rather than sell the stake, but to do so in the space of a few days.
A spokesman maintained today: "There was no intention to mislead people."
The upshot of today's news is that Kazakhmys ends up with a 22.3% stake in ENRC, and the Kazakh government will hold 15% of Kazakhmys, having previously held no shares in the business.
Kazakhmys is now talking up the benefits of co-operation - it has spare capacity in electrical supply, ENRC needs more power. Previously it had spurned a bid approach from ENRC, mainly on the issue of price.
Once more - caveat emptor. Investors may like the recent share price rises, but if the Kazakh government is trying to create a national champion, as suggested by analysts at Evolution Securities, private shareholders may well find themselves low on the list of priorities.
Overall the market has dipped again on worries that inflationary pressures on both sides of the Atlantic will curb any further interest rate cuts. The FTSE 100 finished 50.3 points lower at 5827.3.
Housebuilders are under pressure after the growing number of surveys showing house price falls. Persimmon, likely to lose its position in the FTSE 100 this evening, fell 41.25p to 387.5p while Barratt Developments - thought to need a refinancing - slumped 29.25p to just 91.5p. At this rate the company - which dropped out of the leading index in December - could soon fall out of the FTSE 250.
