LONDON (ShareCast) - Stocks in the oil producing and oil services sectors were hit by renewed selling pressure on Wednesday as crude prices dropped to fresh five-year lows.
A weaker demand forecast from OPEC and a surprise increase in US crude inventories were weighing heavily on oil prices in afternoon trade, with Brent crude dropping 3.6% to $64.47 a barrel in London and West Texas Crude tumbling 4% to $61.23 a barrel in New York.

Brent, having traded at above $100 a barrel until September this year, hasn't fallen this low since mid-2009 as concerns about the supply-demand imbalance intensified.

OPEC estimated that demand for its oil would total just 28.92m barrels per day next year, around 280,000 barrels less than its previous forecast and less than the 29.4m barrels a day in 2014.

Meanwhile, data from the US Energy Information Administration revealed that US crude stockpiles actually increased by 1.45m barrels in the week to 5 December, compared with a 3.69m drop previously and expectations for a 2.70m fall.

Oil major BP was trading 1.5% lower after warning of $1bn of restructuring charges over the next five quarters. Details of the charges will be given with each quarter's results, though the majority of the costs are expected to be related to job cuts.

Sector peers Tullow Oil, Premier Oil, Afren, BG Group, Ophir Energy, Enquest and Faroe Petroleum were suffering steep losses.

Shares in oil equipment, services and distribution were also falling sharply on the back of fears that producers and explorers will cut back or delay project spend until oil prices recover. Petrofac, Wood Group and Hunting all dropped sharply.

BP had already told investors in October that capital expenditure (capex) would fall by $1bn-2bn in 2015 against earlier guidance of $24bn-26bn.

The company said on Wednesday that it is still looking "pare or re-phase" capex as part of its 2015 plan, "recognising the current outlook for oil prices".



Top performing sectors so far today
Forestry & Paper 11,589.98 +2.77%
Technology Hardware & Equipment 1,153.48 +1.43%
General Industrials 3,876.84 +1.41%
Insurance (non-life) 1,884.69 +0.84%
Support Services 6,337.15 +0.81%

Bottom performing sectors so far today
Oil Equipment, Services & Distribution 16,145.66 -2.22%
Oil & Gas Producers 6,858.63 -2.00%
Mining 14,097.65 -1.36%
Automobiles & Parts 7,883.96 -1.26%
Software & Computer Services 1,208.15 -1.12%

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