DUBAI, Jan 11 (Reuters) - A further decline in oil prices to their lowest level in nearly a month may cause further selling of Gulf petrochemical shares on Wednesday, with Saudi Arabia’s equities index testing technical support.
Brent crude futures fell 2 percent on Tuesday, extending the previous session’s sell-off, because of doubts over producers’ plans to cut output.
Petrochemical makers, which make up roughly one-quarter of Saudi Arabia’s market, were the main drag there on Tuesday. The index, last at 7,008 points, looks set to test technical support on its mid-December low of 7,002 points.
However, as Saudi earnings reporting season begins, some petrochemical producers are likely to be favoured over others. Santhosh Balakrishnan, senior analyst at Riyad Capital, said Sahara Petrochemical for example had strong key partnerships with global and regional producers allowing it to benefit from cost synergies.
Shares in Yanbu National Petrochemical Co (Yansab), a subsidiary of Saudi Basic Industries Corp, may outperform its peers on Wednesday after reporting a 53.4 percent rise in fourth-quarter net profit to 602.85 million riyals ($160.7 million), in line with analysts’ forecasts.
United Arab Emirates markets may continue to outperform the region on Wednesday because the UAE economy is less dependent on oil. (Reporting by Celine Aswad; Editing by Andrew Torchia)