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British oil and commodities stocks are jumping for two big reasons

Jan 28, 2016, 15:40 IST

Reuters

Britain's biggest oil and commodities stocks are jumping in the first two hours of trading on Thursday, after the UK government announced a major support deal for the sector and a major resources group said it is not going to stop digging no matter how bad the collapse in prices are.

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Platinum producer Anglo American's shares are up nearly 11% after production climbed by 5% in 2015. That's despite platinum prices hitting a 7-year low at the end of last year.

Other commodities stocks are following Anglo American higher. Glencore is up over 1%, while Vedanta is 9% higher.

Tullow Oil stocks are up around 7.6%, BP stocks are up near 2%, and Shell is up by 2.3%.

Power station owner Drax Group is also one of the leaders of the FTSE 100, with a 3.45% rise as of 10 a.m. GMT (5.00 a.m. ET).

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This morning, the British government announced that it will deliver a £250 million ($350 million) package of funding to boost the oil industry in northeast Scotland, as the sector continually takes a hammering from significantly low oil prices.

"Oil and gas is a crucial sector not just for the northeast of Scotland but for the whole of the UK," said Britain's Scottish Secretary David Mundell in a statement.

"I know it's a very tough time for people who work in the industry and their families and I am determined the UK government will do what it can to support them."

Oil prices are around the $32 per barrel mark - 70% lower than what it was in the summer of 2014. Other commodities have plummeted, with copper prices, seen as a global barometer of industrial demand, plunging to a 5.5-year low last week.

This has caused major damage to the oil and commodities industry and in particular the stock prices.

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For example, Anglo American, the highest riser on the FTSE 100 today, has seen it's stock price crater by over 75% in a year:

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Shell's share price has also fallen by over 30% in a year due to the collapse in oil prices:

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So today's rally is a slight relief but not necessarily the beginning of the end of the global oil and commodities route.

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