Gulf may fall further after oil tumbles again

Selling pressure on stock markets in the Gulf may increase on Thursday after oil prices in the United States tumbled to their lowest level since 2009.

US West Texas Intermediate (WTI) crude slumped over 4 percent on Wednesday as a huge, unexpected stockpile build in the United States reinforced concerns about a growing global oil glut. The European Brent crude benchmark dropped 3.4 percent on Wednesday. Both US oil and Brent have edged down 0.6 percent in Asian trade on Thursday morning. Gulf equities had largely ignored oil's slide over the last few months, partly because of the holiday season, but they started adjusting this month, led by Saudi Arabia whose main index has plunged 12.2 percent in August, losing $50 billion in market capitalisation.

By some technical measures the Saudi index is now oversold in the short term - its 14-day relative strength index is at it lowest level since mid-December, just before the market rebounded sharply - but the medium-term outlook remains bearish.

The stock index fell this week below technical support around 8,500 points, where it had bottomed in March and April; that triggered a double top formed by the March and April peaks, which points down to December's low of 7,226 points.

Qatar, down just 1.3 percent this month, and Kuwait , which has slipped 1.4 percent, have been the most resilient markets in the Gulf. Cheap oil is not only hurting the profits of energy companies and related industries such as petrochemicals or oil and gas shippers, it is also slashing government revenues, which are the main source of financing for large development projects and generous subsidies in the Gulf.