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.

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