Shares in Tullow Oil were under pressure in early trading after analysts at Credit Suisse reduced their target prices on a number of exploration and production companies after taking an axe to Chinese oil demand.

The broker now sees global demand for oil in 2009 down by 300,000 barrels a day year over year, the sharpest drop since 1982, as demand growth from China slows.

Credit Suisse has dropped its oil price forecast from $73 a barrel to $58 a barrel for 2009, and from $98 to $78 in 2010.

Although Tullow remains one of the broker’s top picks in the sector, it cut its price target from 622p to 603p, sending the shares down 3.5p to 556.5p.

The price of a barrel of oil fell today to $58.38, its lowest point since February 2007, amid deepening concerns over weak energy demand. However, oil giants gained, with BP up 9.75p to 518p and Royal Dutch Shell rising 40p to £17.86 as investors sought safe havens.

Overall, the FTSE 100 rose 78.53 points to 4,521.81, lifted by interim results from Marks & Spencer, which were no worse than feared. The retailer’s shares rose almost 9 per cent, up 19.5p, to 241p as investors were relieved that the high street giant maintained its dividend despite tough times.

The results also boosted Next, up 58p to £11.53, and Kingfisher, up 9.5p to 131.5p.

Royal Bank of Scotland fell 3.7p to 61.5p after writing down the value of its assets, unveiling plans to raise more money and providing a cautious outlook.

In the FTSE 250, HMV rose 16.5p to 117.75p and Game gained 19p to 149p on vague talk of a merger.

Housebuilders continued to rise, with Taylor Wimpey up 3p to 16.75p and Barratt Developments up 9p to 95p, on hopes of a rate cut this week.

Punch Taverns was the second string’s heaviest faller, down 12.25p to 171.25p, after posting a full-year loss and giving warning that it did not expect trading to improve any time soon.

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