Gulf Stock Markets Sink After Oil Futures Trade Below Zero

(Bloomberg) -- Equity markets in the Gulf retreated on Tuesday after oil futures prices plunged below zero for the first time in history amid rapidly filling American storage tanks.

Dubai’s main gauge, among the world’s worst equity performers this year, took the lead, falling 3.3% at close. The ADX General Index in Abu Dhabi dropped 2.7%. Equity indexes in Bahrain, Oman, Kuwait and Qatar retreated by 0.5% to 2.6%.

Saudi Arabian stocks slipped 1.6% at close. Oil giant Saudi Aramco was among the biggest contributors to the loss, dropping 2% at the end of the trade day.

“What happened yesterday was for sure a first,” said Marie Salem, head of institutions at Dubai-based Daman Securities. “It looks like the whole story has been contained and now that people understand why things happened the way they did, they are being cautious with their trading.”

On Monday, the May contract for West Texas Intermediate plunged below zero to a level where traders were willing to pay to get somebody to take crude off their hands. U.S. President Donald Trump said he wanted to add as much as 75 million barrels of oil to the country’s Strategic Petroleum Reserve, taking advantage of record low prices, and that he’ll consider blocking imports of crude from Saudi Arabia.

Brent crude traded at $20.56 per barrel while WTI remained in negative territory. Markets across Asia also fell, with benchmarks in Seoul, Tokyo, Hong Kong and Shanghai down more than 1%. The situation right now is “very critical,” according to Salem, “if things are not settled, it would get really ugly.”

©2020 Bloomberg L.P.

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