Dubai: Post the Opec indecision on output ceiling, oil prices continued its southward journey with WTI falling below the keenly-watched $40 per barrel mark, and the sell-off spread to equity markets in the Gulf, with Dubai leading the losses.

The Dow Jones industrial average gave up 154 points, or 0.9 percent, to 17,694 on Monday. The S&P 500 index slipped 19 points, or 0.9 percent, to 2,072 while the Nasdaq composite fell 38 points, or 0.7 percent, to 5,105.

Oil dropped 5 percent to $38 a barrel, near its low for the year. Brent crude prices, the globally traded benchmark, traded down $1 to below $42 a barrel, the lowest since March 12, 2009.

“It is the aftermath of Opec’s decision, the fear is that we will have a lot more supply in the market and there is no one on the other side to pick this one up and hence the price will continue its downward path,” said Naeem Aslam, Chief Market Analyst, Global Head of Analysis at Ava Trade.

On Friday, Opec decided to keep pumping about 31.5 million barrels a day (mbpd), setting aside their previous daily output target of 30mbpd. Opec will wait until June to decide on a new limit, its secretary-general Abdullah Al Badri said.

Surplus production has triggered a more than 40 per cent fall in prices in 2015, and analysts expect further downside amid sagging global demand.

Selling pressure

Equity markets in the Gulf, which is considered as a proxy for oil, came under intense selling pressure with the exception of the Abu Dhabi index. Dubai index led the losses.

The Dubai Financial Market General Index closed 2.21 per cent lower at 3,104.17, after hitting a low of 3,102.25, the lowest level in 2015.

“There was foreign induced selling due to tumbling oil prices and ahead of the Saudi budget,” Mohammad Shabbir, head of equity funds & portfolios at Rasmala Investment Bank told Gulf News.

Going ahead, traders would focus on the most important US Federal Reserve meeting to held in mid next week.

“December would be a very critical month for markets ahead of a Fed rate hike,” Shabbir added.

Elsewhere in the region, Saudi Arabia’s Tadawul index closed 1.30 per cent lower at 7,166.73, while Qatar Exchange index closed 0.78 per cent lower at 10,418.47.

US stock-index futures also declined, following equities’ biggest one-day gain in three months. However, the EURO STOXX 50 index was up 1.47 per cent.