As markets wait for the US jobs data later to discern more clues about whether the Federal Reserve will turn off the money taps, Royal Dutch Shell is one of the day's brighter spots so far.
Investors have welcomed news the oil giant announced it would not move forward with the proposed 140,000 a day gas-to-liquids (GTL) project in the Gulf, and would suspend any further work. The project was said to be costing up to $20bn. Andrew Whittock at Liberum Capital said:
Shell is the industry leader in large-scale GTL technology, and has evaluated a number of development options for GTL on the US Gulf Coast, using natural gas feedstocks. Despite the ample supplies of natural gas in the area, Shell has taken the decision that GTL is not a viable option in North America, at this time, due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shell's strict capital discipline.
This is an encouraging sign that Shell will focus efforts and capital on the most attractive opportunities in its portfolio, in line with shareholder expectations.
Separately HSBC began coverage of the company with an overweight rating, and its B shares have jumped nearly 3%, up 61.5p to 2157.5p.
Overall - after five days of falls - the FTSE 100 is currently moving higher. The leading index has added 28.43 points to 6526.76, but investors continue to be nervous about when the Fed will start to trim its $85bn a month bond buying programme. A positive non-farm payrolls number later could see that nervousness increase rapidly. Rebecca O'Keeffe, head of investment at Interactive Investor, said:
Equity markets remain relatively subdued in the run up to today's US employment number. Despite the probability that the Fed will wait until February or March next year to start tapering, the strength of the US economy has increased the possibility of this happening in December. In theory, it really shouldn't matter when tapering starts, but with the global economy floating on the continued wave of quantitative easing, investors are increasingly fearful of the fallout.
