Gulf stock markets may move sideways on Wednesday with few positive factors to spur buying.
Most major indexes in the region closed well off their lows on Tuesday as blue chips were bought, suggesting the slide of the past several days might be ending. The Saudi Arabian index , last at 6,096 points, tested and held minor technical support on the April low of 6,066 points.
But there is little positive domestic or international news. Asian equity markets are slightly lower early on Wednesday and a rally of oil prices fizzled out.
Oil prices fell as an unexpected build in US crude inventories weighed on markets, along with concerns that Chinese crude demand could falter as Beijing clamps down on alleged tax evasion in the oil industry.
International Brent crude oil futures were trading at US$49.32 a barrel at 06.14 GMT, down 64 cents, or 1.3 per cent, from their last close.
US West Texas Intermediate (WTI) crude was down 72 cents, or 1.5 per cent, at $47.38 a barrel.
Robust Chinese crude demand growth has been driven by independent refiners, also know as teapots, who began to import crude last June after obtaining government crude import quotas and licences.
But Beijing’s crackdown on alleged tax evasion in the oil industry, targeting the teapots, threatens to put a lid on Chinese demand.
“The question now is whether the teapots will start cutting runs,” a Singapore-based trader said, adding that falling Chinese demand would be a double whammy for the oversupplied crude market.
The Saudi index faces technical resistance on its early August low of 6,226 points; its break below that level earlier this week turned the market medium-term bearish.
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