Oil’s slide may pressure Arabian Gulf stocks

Shares across the region that are sensitive to crude prices may come under pressure today but good results from Abu Dhabi banks should mitigate that to some extent.

A steep overnight decline in oil prices may hurt oil-sensitive shares in the Arabian Gulf on Thursday but positive earnings from the largest bank in the United Arab Emirates may boost Abu Dhabi’s index.

Brent crude traded as low US$52.58 a barrel on Wednesday after a surprising build in US gasoline inventories, although the price has since partially rebounded to $53.12.

First Abu Dhabi Bank, formed on April 1 by the merger of National Bank of Abu Dhabi and First Gulf Bank, posted a 12.4 per cent rise in combined “pro-forma” first quarter net profit to Dh2.93 billion.

That was aided by a 145.5 per cent jump in “other non-interest” income while loan impairment charges dipped 3.9 percent. The merger is expected to produce cost savings of Dh500 million, the bank said.

Adnoc may also attract interest after its chief operating officer said on Wednesday it might sell some oil and gas interests in North America to raise capital for its core business.

Earlier this month Taqa said the state-owned utility company had raised its stake in the company to 74 per cent from 52.38 per cent after granting Taqa land valued at Dh18.7bn that could potentially offset accumulated losses. Shares in Taqa have risen almost 8 per cent since the start of the month.

In Saudi Arabia, shares in cement companies may remain under pressure as yet another producer posted a double-digit decline in first-quarter earnings. Qassim Cement reported a net profit of 80.3m Saudi riyals, down 40 per cent from the prior-year period.

* Reuters

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