Gulf rises on strong oil; Dubai tests chart barrier

Gulf stock markets rose moderately in early trade on Wednesday after oil prices jumped overnight, although modest trading volumes on the bourses showed many investors remain wary of the longer-term direction.

Dubai’s stock index was up 1.0 per cent at 3,694 points after an hour, testing technical resistance around 3,700 points, which capped it repeatedly in September. Any break of its recent range would point it up to around 3,900 points.

Real estate developer DAMAC surged 4.0 per cent and was the market’s most heavily traded stock after the company said it was starting a month-long roadshow to showcase its portfolio and promote Dubai as investment destination; it will attend events and exhibitions in India, Britain and Kenya.

In other markets, companies related to the oil and gas industry drew the most attention. Abu Dhabi edged up 0.2 per cent as Dana Gas, the most active stock, added 1.9 per cent.

Qatar’s index also gained 0.2 per cent as drilling rig provider Gulf International Services topped the volume list and rose 3.7 per cent. Petrochemical producer Industries Qatar climbed 1.4 per cent.

Brent crude jumped 5.4 per cent on Tuesday, closing above $50 a barrel for the first time in a month, and continued rising in Asian trade on Wednesday morning.

The U.S. Energy Information Administration predicted in a report that global oil demand would grow by the most in six years in 2016 while non-OPEC supply would stall. Overall, the report suggested a global supply glut might be easing.

If oil prices have indeed bottomed out – which remains uncertain – that would be very good news for Gulf equities, since much of their weakness in recent months has been due not to the absolute level of oil prices but to fears that they could sink further.