It’s been a bumpy ride today for European stocks.

They dipped at the open, rebounded with some strong gains, but are now slipping back into the red as oil takes a hammering.

The FTSE 100 was up as much as 0.4 per cent earlier, but is now nursing a 0.7 per cent loss.

The Stoxx 600 jumped as much as 0.9 per cent, but is now off 0.3 per cent.

The oily stuff and the miners are doing the damage, with the Stoxx 600 energy sub-index off 1.1 per cent, and the mining sub-index down 0.5 per cent.

This comes as oil prices slide amid scepticism that 23 per cent rally seen since the start of August has gone too far too fast.

Brent is off 3.1 per cent today at $49.33, its biggest one-day drop in more than a month.

Neil Mellor at BNY Mellon says:

Some doubts may have crept into the price action today and rightly so: any trend predicated on a perceived understanding of the politics of OPEC should be held with some scepticism and this one is no different.

There may have been an element of cognitive dissonance in the market, whereby investors may have understandable doubts about OPEC, but are ready to believe given the recent slide in the USD and the opportunity this has presented them. Only time will tell whether OPEC justifies the market’s optimism, but a more prudent approach is definitely warranted in the run up to the meeting next month – a conclusion the market may already have arrived at.

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