JEDDAH — Stock markets in the energy-rich Gulf states nosedived on Tuesday as oil prices slumped and global markets were dragged down by a gloomy outlook for crude. US benchmark West Texas Intermediate for February delivery dropped below the $50 a barrel mark for the first time in more than five and a half years while Brent crude was hovering around $52 a barrel. Since June last year, oil has lost around 55 percent of its value on a production glut, weak demand and a strong US dollar. Stock markets tumbled in the United States, Asia and Europe on a grim economic outlook and the prospect of a fresh stimulus for the eurozone that risks losing Greece as a member. The six Gulf states pump over 17 million barrels per day and oil income makes up around 90 percent of their revenues. All seven Gulf bourses have been down since the start of the year as investor confidence is dented by the slide in oil prices. The Saudi Tadawul All-Shares Index, the Gulf's largest market, dropped more than 4.0 percent at opening and later traded 0.61 percent lower to 8,057.43 points. So far, TASI has lost 6.4 percent in 2015. Only four sectoral indices ended in green, namely Building & Construction, Real Estate Development, Transport, Media & Publishing. The Dubai Financial Market (DFM) Index dived 5.7 percent at the start of trading before closing the day 3.2 percent lower on 3,450.00 points. The DFM Index, which ended 2014 up 12 percent, has shed 8.6 percent this year, the biggest loser among Gulf exchanges. Neighboring Abu Dhabi Securities Exchange dropped 2.66 percent to 4,311.89 points. It has lost 4.8 percent since the start of the year. Qatar Exchange, the second largest bourse in the region, dropped 1.5 percent to finish the day on 11,811.75 points. It was the top gainer last year rising 18.4 percent but is down 3.8 percent this year. Kuwait Stock Exchange dipped 1.5 percent to close trading on 6,397.87 points. It has lost 2.1 percent this year. In Oman, the Muscat Securities Market also closed down 1.3 percent on 6,229.87 points, 1.8 percent lower than last year's close. The small Bahrain bourse ended the day up 0.3 percent but was flat on the year. Oil prices slid Tuesday to the lowest points for more than five and a half years, plagued once again by a global supply glut, demand fears and the soaring dollar. US benchmark West Texas Intermediate for February tanked to $48.49 a barrel, touching a low last witnessed in late April 2009. In morning deals in London, Brent North Sea crude for delivery in February dived to $51.23 per barrel, the lowest level since early May of the same year. “The oil price fell further to print fresh five-year lows ... on a combination of over-supply fears, a Saudi state-owned oil company cutting prices to Europe and the US, a strong dollar and increased bets on further falls,” said Mike van Dulken, head of research at trading firm Accendo Markets. “This added to depressed global inflation expectations, while Greek political woes and its future within the single currency ... added to existing unease about the global growth outlook.” Later on Tuesday, WTI stood at $49.06, down 98 cents from Monday's closing level. Brent was $1.05 down at $52.06. Oil had collapsed Monday, with New York crude breaching the psychological $50 mark for the first time since spring 2009. Over the day, WTI lost $2.65 and Brent shed a hefty $3.31. “Oil prices got off to a disastrous start to the new year of trading,” added Commerzbank analyst Carsten Fritsch. “The price slide is continuing (on Tuesday with) a plentiful oil supply still putting pressure on prices.” Oil slumped almost 50 percent in 2014, the most since the 2008 financial crisis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as it competes with US producers. The market faces “more problems” this year, according to Morgan Stanley, with surging output in Russia and Iraq contributing to a surplus that Qatar estimates at 2 million barrels a day. “The market is obsessed with the supply side,” Hans van Cleef, energy economist at ABN Amro Bank NV in Amsterdam, said by phone. “Prices have dropped too fast and too far, but with the market this negative it's hard to see a trigger which could turn the sentiment. If US inventories are higher than expected, we could see Brent below $50 this week.” — SG/Agencies
