Shares in Dubai and Saudi Arabia rebounded on Sunday, buoyed by a 15 per cent rally in oil prices at the tail end of last week.
The Dubai Financial Market General Index rocketed 6.6 per cent at the opening bell, eventually closing up 5.1 per cent at 2,757.08, its highest one-day rise since December 2014.
Saudi Arabia’s Tadawul, which had lost 21 per cent of its value during the first three weeks of the year because of falling oil prices, surged 6.7 per cent at the opening of trade, eventually closing up 2.7 per cent.
The Qatar Exchange ended the day up 4.6 per cent, while Abu Dhabi’s headline index closed 2.7 per cent higher at 3,839.05.
“The market has been oversold for a really long time, so this was largely expected,” said Tariq Qaqish, the head of asset management at Al Mal Capital in Dubai.
There was a record surge in oil prices at the end of last week, with both Brent and West Texas Intermediate (WTI) marking their first positive week of 2016, as traders placed bets that current production levels are unsustainable in the short term.
The UAE energy minister, Suhail Al Mazrouei, speaking at the World Economic Forum at Davos on Friday, predicted that oil prices would stabilise at “a fair price for the producers and consumers” by early 2017.
After hitting a new low of $27.88 on Wednesday, Brent crude futures surged by 15 per cent, closing out at the week at $32.18, attributable in part to colder than expected weather in the US and Europe.
However, analysts remain cautious about the outlook for oil in the coming few months.
“Oil will find buyers in the medium term, and the $27 to $30 a barrel is holding as a key support level, but production and reserves remain high,” said Nour Eldeen Al Hammoury, the chief market strategist at ADS Securities in Abu Dhabi.
The commodity’s recovery prompted a rally across global stock markets, the S&P 500 and FTSE 100 posting their strongest gains of the year so far.
Stocks were further buoyed by comments from the European Central Bank president Mario Draghi, who hinted that the bank may look at the possibility of introducing further quantitative easing in March.
Follow The National’s Business section on Twitter