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Strong oil may help Gulf maintain positive momentum

Bourses in Saudi Arabia and Dubai closed at their highest levels this year on Sunday thanks in part to oil's rally last week

DUBAI, April 27 (Reuters) – Strong oil prices may support Gulf stock markets on Monday, although the latest batch of first-quarter earnings reports from Qatar and Dubai contained no positive surprises.

Brent crude held near a 4-1/2 month high above $65 a barrel on Monday, supported by concerns about the fighting in Yemen potentially disrupting Middle East supplies and signs that U.S. shale output may have started to decline.

The number of active U.S. rigs drilling for oil has fallen for a record 20 weeks in a row to the lowest level since 2010, according to Baker Hughes data.

Bourses in Saudi Arabia and Dubai closed at their highest levels this year on Sunday thanks in part to oil’s rally last week. Investor sentiment may remain positive in the region if crude holds current levels or advances further, while any pull-back may trigger profit-taking in equities.

“UAE (United Arab Emirates) and Saudi will look (this week) to consolidate what has been an impressive month while corporate earnings and the fluctuating oil price are watched closely in order not to get caught with another wave of selling,” Dubai’s Al Masah Capital said in a note on Sunday.

“However, buyers are certainly in a much better place than they were at the beginning of the month, so they will look to keep momentum on their side.”

Dubai’s index, which last closed at 4,172 points, faces strong technical resistance at its 200-day average, now at 4,255 points.

Saudi Arabia’s index, which rose to 9,725 points on Sunday, is close to breaking through resistance in the 9,572-9,745 point area, where the 200-day average roughly coincides with the March peak.

Corporate earnings published after Sunday’s close were not very impressive, however.

Bourse operator Dubai Financial Market (DFM) reported a 69 percent drop in first-quarter net profit as trading volumes fell. The firm made 67.7 million dirhams ($18.4 million) in the quarter while HSBC had forecast DFM would earn 78.0 million dirhams.

Qatari property firm Ezdan Holding posted a 13.4 percent increase in first-quarter profit, a slowdown from its full-year 2014 profit growth of 27 percent.

Another real estate company, United Development, said its profit rose 8.5 percent in the first quarter; it nearly doubled last year.

On global markets, Asian stocks have edged up after strong earnings from a few U.S. high-tech giants, but investors are cautious ahead of central bank meetings this week in the United States and Japan and because of the deadlock in creditors’ talks with Greece. (Reporting by Olzhas Auyezov; Editing by Andrew Torchia)