Travel stocks soar in London as OPEC choses to maintain output target

27th Nov 2014 20:17

Oil stocks were the clear losers in London on Thursday after the Organization of Petroleum Exporting Countries (OPEC) chose not to cut production despite a global supply glut, sending crude prices to levels not seen since 2010.Brent crude dropped by 6.7% to $72.58 a barrel on the ICE, while West Texas Intermediate (WTI) slid 6.3% to $69.05 a barrel, its sharpest one-day decline in over three years.However, while producers and explorers were bearing the brunt, travel stocks rejoiced on hopes that the recent slump in oil prices - now likely to be sustained for the near term at least after the OPEC decision - will feed into lower fuel costs, and ultimately higher profits.Budget airline Easyjet jumped by nearly 6%, British Airways owner IAG rose 5% and leisure travel group TUI Travel dropped 4%.Cruise operator Carnival, UK regional airline Flybe and Irish carrier Ryanair were also performing well.Travel operator Thomas Cook was also a high riser, up 5% though the stock was recovering after dropping nearly 18% the previous session following the surprise exit of its chief executive.At a meeting in Vienna, OPEC members chose to keep their oil production ceiling at 30m barrels a day, ignoring calls to lower output to support falling oil prices.Some analysts have speculated that prices could even drop to as low as $60 a barrel if OPEC didn't lower their target."In the short term, given market scepticism that recent price levels are low enough to substantially slow US output growth, we expect prices to levels to drop below $70/bbl for Brent and even lower for WTI," according to analysts at Barclays.