Most Gulf markets rise while Saudi bourse holds steady
Most Gulf stock markets rose on Sunday against a backdrop of rising oil prices on improving economic indicators from China and the United States.
Oil prices, a catalyst for the Gulf’s financial markets, rose about 1% on Friday as stronger Chinese data added to recent US indicators feeding optimism over global oil demand.
The Qatari benchmark index was up 0.1%, supported by gains in most sectors, with Qatar Gas Transport rising 1.2% and Qatar Navigation up 2.2%.
Meanwhile, the International Monetary Fund said on Friday that Qatar’s average economic growth was expected to be lifted to about 4.5% by a significant expansion of liquefied natural gas (LNG) production.
Saudi Arabia’s benchmark index was little changed, with ACWA Power rising 3.4% and Saudi Aramco up 0.5%. State-owned oil giant Aramco said on Friday that it had signed preliminary agreements with US companies developing lower-carbon energy solutions.
However, Saudi National Bank and developer Makkah Construction slipped by 1.5% and 8% respectively.
Outside the Gulf, Egypt’s blue-chip index advanced for a second straight session to end 4.5% higher, with most of its constituents posting gains, led by industry and materials stocks.
Misr Fertilizers Production climbed 17.8% and El Sewedy Electric jumped by 20% after Egypt’s Financial Regulatory Authority (FRA) said on Sunday that Electra Investment Holding had submitted an offer to acquire up to a 24.5% stake in El Sewedy at $1.05 per share.
Brent settled 71 cents higher, or 0.9%, at $83.98 a barrel. US West Texas Intermediate crude (WTI) gained 83 cents, or 1.1%, to $80.06. For the week, Brent gained about 1%, while WTI rose 2%. China’s industrial output rose 6.7% year-on-year in April as a recovery in its manufacturing sector gathered pace, pointing to possibly stronger demand to come.
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China also announced major steps to stabilise its crisishit property sector. The Chinese figures showed potential for demand construction and supported oil prices, said Bob Yawger, director of energy futures at Mizuho. However, government data showing a drop in China’s annual refined output may have offset that support.
Declines in oil and refined product inventories at global trading hubs have also created optimism about demand, reversing a trend of rising stockpiles that had weighed heavily on crude oil prices in previous weeks.
The US oil rig count rose by one this week to 497, the first increase in four weeks, energy services firm Baker Hughes said. Recent US economic indicators have fed into the optimism over global demand for oil.
US consumer prices rose less than expected in April, data showed on Wednesday, boosting expectations of lower interest rates. “Consumer prices were not as bad as expected,” said Tim Snyder, economist at Matador Economics. “It gave the US a little bit of a boost.” Lower US interest rates could help soften the dollar, which would make greenbackdenominated oil cheaper for buyers holding other currencies. Meanwhile, a fire started at Russia’s Tuapse oil refinery overnight after a wave of Ukrainian drone attacks. The extent of the damage was unclear.
On the supply side, investors were mostly looking for direction from the upcoming OPEC+ meeting on June 1.
The move “demonstrates solidarity and unity” within the OPEC+ framework, OPEC said, as well as removing the “potential for misunderstanding.” OPEC+ has been working together since 2016 through a pact called the Declaration of Cooperation (DoC).
An OPEC+ source told Reuters, which reported on the switch last week, that the move reflected the fact that OPEC+ demand was now more relevant because the DoC nowadays was the framework for cooperation on the oil market.
In the report, OPEC projected 2024 demand for DoC crude at 43.2 million bpd, compared with world oil demand of 104.5 million bpd, and said the group produced 41.02 million bpd in April, below the expected demand.