FTSE breaks the 5200 barrier

Soaring oil prices helped to push the London stock market through a key barrier for the first time in more than three years today.

The FTSE 100 Index of leading shares lifted above the 5200 level to stand at 527 by mid-morning after the price of US light crude moved back above 60 US dollars a barrel.

The Footsie last breached the 5200 barrier in May 2002, but then slid back to below 3500 at the start of 2003 as factors including the war in Iraq and the Sars virus in Asia hit the world economy.

Market oil heavyweights BP and Shell were driving today’s progress in the blue chip index, with shares in both lifting by more than 1% in mid-morning trading. Analysts said the two oil majors had added a combined 14 points to the FTSE’s climb.

The price of a barrel of US light crude rose 45 US cents to 60.04 dollars in mid-morning trading amid concerns about supply disruption in the US.

Oil analyst Bruce Evers at Investec said he believed the price could touch 70 US dollars before the end of the year, which may push the price of a litre of unleaded petrol on UK forecourts to £1.

“There’ll be no relief for the poor old motorist just yet,” he said.

Oil companies were forced to evacuate rigs and shut down 3% of the production capacity in the Gulf of Mexico as a tropical storm pounded the Gulf Coast.

Mr Evers said there could be further disruption from tropical storm Dennis, which is heading into the main production area in the Gulf of Mexico – which accounts for a quarter of US oil production.