Shares in Abu Dhabi rose to the highest level in three weeks, leading gains in Gulf Arab markets, after crude oil surged the most in more than two years. Dubai’s stocks also advanced.

The ADX General Index (ADSMI) added 1.9% to 4,567.47, the strongest since December 29, at 12:05 p.m. local time. First Gulf Bank PJSC led the increase with a 2.4% jump. Dubai’s DFM General Index (DFMGI) rose 1.6% and was headed for the highest level in almost three weeks and Qatar’s QE Index climbed 0.7%.

Brent, the benchmark for more than half the world’s oil, surged 5.2 percent, the most since June 2012, to $50.17 a barrel on January 16. The International Energy Agency lowered its forecast for supply from non-OPEC oil producers this year. Four out of six Gulf Cooperation Council states are part of the 12-member Organization of the Petroleum Exporting Countries.

“The oil price pulled up quite nicely over the weekend, which is helping investor confidence in the regional markets,” Saleem Khokhar, who helps oversee about $3 billion at NBAD Asset Management Group, said by telephone from Abu Dhabi. “The move today is purely sentiment driven.”

Oil fell almost 50% last year, the most since the 2008 financial crisis, as supplies swelled amid the fastest pace of U.S. production in more than three decades and OPEC resisted calls to cut output. The decline in crude prices sent at least six stock indexes in the GCC, home to about a third of the world’s proven oil reserves, into bear markets since November.

The valuation of Abu Dhabi’s shares rose to 11.2 times estimated 12-month earnings, compared with 10.6 for MSCI Inc.’s emerging markets index. The ADX’s 14-day relative strength index rose to 53.5, the highest since November.

FGB rose to 17.15 dirhams. National Bank of Abu Dhabi PJSC, the United Arab Emirates’ biggest bank by assets, jumped 5.8%, the sharpest increase in almost a month.
Shares in Saudi Arabia, the world’s biggest oil exporter, climbed 0.1 percent. Saudi Basic Industries Corp. (SABIC), the petrochemical maker with the second-highest weighting on the index, fell 0.8 percent. The company reported a 29% drop in fourth-quarter profit to 4.36 billion riyals ($1.16 billion) as lower oil prices reduced returns from its products.

The mean estimate of seven analysts was for 5.39 billion riyals, according to data compiled by Bloomberg.

Source: Bloomberg