DUBAI, Sept 29 (Reuters) - A rally in oil prices following OPEC’s surprise move to curb crude output modestly at its meeting in Algeria is set to boost Gulf stock markets on Thursday.
Brent oil soared 6 percent on Wednesday after the Organization of the Petroleum Exporting Countries agreed to limit its production to a range of 32.5-33.0 million barrels per day.
There is some scepticism over whether the deal can produce any uptrend in oil prices and whether it will hold together over the long term. But for now at least, it may have put a floor under oil.
Saudi petrochemical shares were particularly hard hit on Tuesday and Wednesday, when the main Saudi index tumbled 7.1 percent over a two-day period. Petchems now look likely to help the index rebound.
“Now that there is positive news to trade on, the industry will outperform,” said Mohammad Shammasi, chief investment officer at Riyadh-based Derayah Financial.
Other Saudi sectors, especially consumer discretionaries, may not be as upbeat because although higher oil prices will help government finances, tough austerity measures - including cuts to civil service bonuses announced this week - are expected to remain in place.
News that the U.S. Congress overwhelmingly rejected President Barack Obama’s veto of legislation allowing relatives of victims of the Sept. 11 attacks to sue Saudi Arabia is negative but may have little impact on the stock market because the economic implications for Riyadh, if any, are not yet clear.
The Saudi riyal has dropped moderately against the dollar in the forwards market and Saudi credit default swaps have risen only marginally.
Other Gulf bourses may be buoyed by both oil prices and firm global equities; MSCI’s broadest index of Asia-Pacific shares outside Japan is up 0.8 percent. (Reporting by Celine Aswad; Editing by Andrew Torchia)