October 4, 2017 / 5:47 AM / a year ago

MIDEAST STOCKS-Slide in oil prices may pressure petrochemical sector

DUBAI, Oct 4 (Reuters) - Petrochemical shares in the Gulf may come under pressure on Wednesday as oil prices have continued to slide, while trading volumes in equities generally may be low as investors await third-quarter corporate results.

Brent oil was down at around $55.70 a barrel on Wednesday morning, off about 6 percent from its 2015 high, hit in late September.

Many analysts are predicting a slight dip in the profitability of petrochemical companies in the Gulf during the third quarter, mainly because of higher feedstock costs.

“The results of Advanced Petchem are not the canary in the coal mine for the petrochemical sector - we expect the sector’s aggregate net profit to decline,” said a Saudi-based equity analyst.

Saudi Arabia’s Advanced Petrochemical on Sunday reported a 10 percent rise in third-quarter net profit; its shares rose 1.4 percent to 45.86 riyals in response.

Analysts at Al Rajhi Capital said the company had managed to “keep up its reputation as an operationally strong company, beating estimates for the third time in a row”, and raised their price target to 49 riyals.

The mood in international equity markets is positive; MSCI’s broadest index of Asia-Pacific shares outside Japan is up 0.3 percent, heading for a fourth straight day of gains. (Reporting by Celine Aswad; Editing by Andrew Torchia)

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