Saudi, Qatar markets gain on oil cut deal

12/12/2016 05:41 AST

Stock markets in Saudi Arabia and Qatar posted broad-based gains on Sunday after Opec and non-Opec oil producers a day earlier reached their first deal since 2001 to curtail oil output jointly in a drive to prop up prices.

The oil producers’ deal supported fresh buying of stocks and the main Saudi index added 1.1 per cent to 7,198 points, its highest close this year, in heavy trade.

On Saturday, producers from outside the 13-country group agreed to reduce output by 558,000 bpd, short of the initial target of 600,000 bpd, but still the largest contribution by non-opec ever. Of that, Russia will cut 300,000 bpd.

The Saudi petrochemical index surged 2.4 per cent as higher oil prices could boost profit margins.

Saudi International Petrochemical Co (Sipchem) gained 4.0 per cent after saying an affiliate had signed a contract with South Korea’s eTEC E&C for work costing 542.6 million riyals ($144.6 million) to raise the efficiency of operations at its methanol plant in Jubail.

Construction firm Khodari jumped by its 10 per cent daily limit in very heavy trade to 12.95 riyals, nearing major technical resistance on its May peak of 13.10 riyals.

The stock has been buoyed in recent days by signs that the government is making long-delayed payments on its debts to the construction sector, which could help Khodari directly and also indirectly by improving liquidity in the economy and helping some stalled projects go ahead.

Higher oil prices may make it easier for the government to find money for those payments. Some insurance sector stocks favoured by local retail speculators also surged, with Wafa Insurance up 6.4 per cent.

In Qatar, the index added 1.3 per cent at 10,188 points, climbing above technical resistance on the 200-day average for the first time since early November, although trading volume was modest.

Mesaieed Petrochemical gained 3.7 per cent and oil drilling rig provider Gulf International Services surged 2.5 per cent, while Qatar Commercial Bank jumped 4.1 per cent.

Bourses in the United Arab Emirates, Bahrain and Egypt were shut to mark the birthday of Prophet Mohammed.

The Gulf Today