Oil cannot maintain gains
On Wednesday, Brent oil futures fell more than 1% to below $83 a barrel as rising US inventories outweighed increased demand confidence from China, the world’s largest importer, and Russian production cuts.
According to the API report, US oil stocks increased by 6.203 million barrels last week, which was far more than the market’s expectation of a 440,000 barrel increase.
Yet, encouraging data on China’s industrial and services sectors encouraged expectations for a significant uptick in demand there. In 2023, investors predicted that China’s oil imports would reach a record level due to increased transportation fuel consumption and the startup of new refineries.
On the supply side, Russia disclosed its plans to go beyond its publicly stated output limitations of 500,000 barrels per day and cut oil exports from its western ports by up to 25% in March.
India, the world’s largest importer of vegetable oils, has decided to eliminate a duty-free import quota of 2 million tons of crude sunflower oil for the next fiscal year beginning on April 1. The decision was made in an effort to promote domestic oilseed growers.
As oil prices increase, Gulf stocks rise
The action could result in increased imports of palm oil, which previously attracted taxes despite the fact that imports of sunflower oil and soy oil were permitted tax-free under the quota. On Wednesday, Gulf stocks slightly increased as oil prices maintained their advances following positive news on China’s manufacturing activity that improved expectations for future global fuel demand.
An official indicator revealed that China’s manufacturing activity grew at the quickest rate in more than ten years in February, far exceeding forecasts as production surged in the wake of the removal of COVID-19 limitations late last year.
Oil prices—a key factor in Gulf economies—had increased by 0.5%. The benchmark stock index for Saudi Arabia increased by 0.7% to begin March on a positive note following a 6.6% loss in February.
Gains in financials lead to increase in UAE stock indexes
Financials saw some of the biggest gains, with most banks trading in the green. Al Rajhi Bank, the world’s largest Islamic bank by market value, and Riyad Bank both had gains of 1.1% and 2.9%, respectively.
Dubai’s benchmark stock index increased by 0.1% thanks to gains in industrial and real estate firms. Emaar Properties, a reputable developer, increased 1.7%, and Salik, a toll operator, increased 2.3%.
The largest lender in the United Arab Emirates, First Abu Dhabi Bank, saw a 0.3% gain, while Alpha Dhabi Holding saw a 0.6% increase, as the benchmark stock index in Abu Dhabi increased by 0.1%.
After announcing a 50 fils annual dividend proposal per share, Emirates Insurance saw an almost 15% increase. Once the helicopter operator indicated its board would review the ADQ offer and seek shareholders’ approval for the same, Abu Dhabi Aviation’s stock increased by more than 8%.
In October, ADQ, the Abu Dhabi sovereign wealth fund, announced a plan to obtain majority ownership in Abu Dhabi Aviation with the aim of forming a “globally competitive aviation firm”. This move accompanies ADQ’s investments in Etihad Engineering, AMMROC, and GAL.
