MARKET WRAP Gulf indexes move higher with hope of Opec continuing oil supply cuts
Most Gulf markets moved higher yesterday as Iraq’s oil minister said that Opec and allied oil producers will consider further oil supply cuts when their leaders meet in Vienna this week, in a move expected to support oil prices.
In Saudi Arabia, the benchmark index was up 0.6 per cent 7,902 points, with Al Rajhi Bank advancing 1.6 per cent and Sabic up 0.9 per cent. Ataa Educational added 2.2 per cent after a non-binding preliminary agrement to acquire a 92.1 per cent stake in Kingdom Schools.
The Kuwait Premier Market Index closed 1.8 per cent up to to 6,633 points, outperforming its Gulf peers, as Kuwait Financial House and Boubyan Bank added 4 per cent and 2.1 per cent, respectively. The
Bahrain central bank approved KFH’s acquisition of Ahli United Bank, while Boubyan confirmed it is in advanced talks to buy all of the remaining shares it does not own in BLME Holding, a UK-based Islamic lender.
Egypt’s blue-chip index fell 0.5 per cent to 13,781 points, with Qalaa Holdings shedding 4.3 per cent after brokerage Pharos Research on Thursday cut its valuation of the investment company to 2.70 Egyptian pounds per share from 3.29 pounds.
Orascom Investment Holding slipped 2.4 per cent as its third-quarter net profit declined to 62.6 million Egyptian pounds from 1.22 billion pounds a year earlier.
The Dubai and Abu Dhabi stock markets are closed for three-day public holidays and will resume trading on Wednesday.
The Bahrain All-Share index rose 0.4 per cent to 1,533 points while the Muscat Securities Market was up 0.3 per cent to 4,074 points.
Oil prices ended last week sharply lower, with US crude prices down more than 4 per cent over the course of the week as crude production levels in the US hit record highs.
West Texas Intermediate futures closed down 4.1 per cent last week at $55.17 per barrel, but gains made earlier in the month meant it finished November about 2.3 per cent higher.
Brent Crude futures closed last week 1.5 per cent lower at $62.43 per barrel, but were up 6 per cent overall on the month on expectations of an agreement to extend cuts being thrashed out at the Opec meeting in Vienna this week.
Moscow is supporting Saudi Arabia’s push for stable oil prices amid the listing of state oil giant Saudi Aramco, and this week’s gathering coincides with the planned announcement of the final pricing for Aramco’s initial public offering on Thursday.
Investors, however, were also eyeing whether the producer group would agree to deeper cuts.
“The bottom line is some people are looking for Opec+ to cut production, and I don’t think that’s going to happen,” said
Andrew Lipow, president of Lipow Oil Associates in Houston. If the cuts fall short of expectations or last only a few months, the market will sell off, he said.
Opec+ agreed to reduce supply by 1.2 million barrels per day in 2019 through to March 2020 as US output continues to climb to record levels.
US output in September rose to a new record of 12.46 million bpd from 12.397 million bpd in August, the government said in a monthly report last Friday.
A Reuters poll of 42 economists and analysts forecast Brent to average $62.50 per barrel next year, little changed from last month’s $62.38 outlook, which was the lowest prediction for 2020 in about two years.
The benchmark has averaged about $64 per barrel so far this year.