This article first appeared in The Edge Financial Daily on January 24, 2018

KUALA LUMPUR: Malaysia Petroleum Resources Corp Bhd (MPRC) said oil and gas (O&G) support service providers should not be “overexcited” about the recent rise in crude oil prices above US$70 (RM275.10) a barrel because prices of the commodities are still expected to be volatile.

“The interest in O&G companies is [returning] quite a bit, especially after the Petronas Activity Outlook [2018-2020 report] came out, and after Petronas (Petroliam Nasional Bhd) contract awards recently. [But] the key point to note here is that one swallow does not make a spring.

“The recent [crude oil] price blip, in our view, is very seasonal. It is still going to go up and down,” MPRC president Datuk Shahrol Halmi told reporters yesterday.

As such, he advised participants in the O&G market not to count on any further rally in oil prices, amid uncertainties in the factors which have influenced prices recently.

These include the increasing efficiency of US shale producers, together with the presence of alternatives which can permanently steal away demand for oil.

“Don’t get overexcited by the temporary blips. If prices go up, renewables will come and claw into the market share of fossil fuel as far as energy use is concerned. But when oil prices go down again, these things will not go away. It will be very difficult for fossil fuel to claw back,” added Shahrol.

MPRC is expecting the oil price to be at the US$60-US$70 per barrel (bbl) range this year, while Petronas has a more conservative forecast of US$50-US$60/bbl.

Last Monday, the Brent crude oil price closed above US$70/bbl for the first time in three years.