Dubai: Abu Dhabi and Dubai indices may witness a strong start to the week buoyed by strong performance crude oil, which has been a major sentiment driver.
After a very volatile week, the Dubai Financial Market General Index closed 4.03 per cent higher at 3,648.45 on Thursday, while the Abu Dhabi Securities Exchange General Index closed the session 3 per cent higher.
The rally was mainly led by property stocks like Emaar Properties, Arabtec and Amlak Finance. Amlak jumped more than 9 per cent, while Arabtec shares jumped more than 5 per cent in trade in Dubai. In Abu Dhabi, Aldar Properties closed 6.94 per cent higher.
Most of the Gulf economies depend heavily on crude oil for revenues for their budgets. On Friday, Brent crude closed 5.24 per cent higher, above the keenly-watched $50 per barrel mark.
However, most analysts question if the oil rally would sustain going forward amid a supply glut and falling world demand. Oil prices have fallen more than 50 per cent since September last year.
World oil prices roared back to $50 a barrel in the second day of a frenetic short-covering rally on Friday, with violence in Yemen, a storm in the US Gulf and refinery outages helping extend the biggest two-day rally in six years.
Oil had tumbled in tandem with stocks over much of the past week, hitting 6-1/2-year lows below $40 a barrel as Chinese financial tumult stoked fears of slowing growth. Oil rallied on Thursday as equities rebounded, but on Friday oil kept pushing higher even as equity markets were calm.
Dealers said a handful of emerging risks fed oil’s gains.
Warplanes from a Saudi-led coalition continued raids in Yemen even as tropical storm Erika moved closer to Florida, prompting worries about offshore oil and gas installations.
Brent, the global oil benchmark, closed up $2.49, or 5 per cent, at $50.05, after nearly reaching $51 a barrel. It gained 10 per cent on the week.
US crude’s front-month contract snapped an eight-week losing streak, rising $2.66, or 6.3 per cent, to settle at $45.22 a barrel. At its session high, it was up more than $3, or 7 per cent at nearly $46. For the week, it rose 12 per cent.
“A severely oversold and shorted oil market is creating a bid for covering,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
Some analysts said the two-month slump of nearly 30 per cent meant a rebound was due.
But others were convinced the rally would sputter, pushing prices lower again.
— With inputs from Reuters
