KUALA LUMPUR (Feb 5): Shares of Malaysian oil and gas (O&G) companies fell as crude oil prices declined due to a stronger US dollar. Crude oil prices dropped with the broader market as investors took their cue from higher US bond yields amid US interest rate hike expectation.

Among Bursa Malaysia-listed O&G shares, Hibiscus Petroleum Bhd dropped 7.5 sen to settle at 87.5 sen at 12:30pm with some 63 million shares traded. Hibiscus was Bursa Malaysia's most-active stock.

Sapura Energy Bhd was the second most-active stock with about 39 million shares transacted. Sapura Energy fell three sen to 70.5 sen. In the broader market, the FBM KLCI was down 16.89 points at 1,853.59 points.

"The decline (in O&G shares) could also be because if you look at the technicals, O&G stocks have been overbought for the past few weeks," MIDF Amanah Investment Bank Bhd analyst Aaron Tan said.

Reuters reported that oil prices on Monday extended declines from the end of last week amid a wider market selloff and a stronger US dollar, with Brent crude falling to its lowest in nearly a month. Other markets dropped as investors were spooked by Friday's payrolls report from the United States, which showed wages growing at their fastest pace in more than 8½ years, fuelling inflation expectations.

Brent was down 68 US cents, or 1%, at US$67.91 a barrel at 0344 GMT, after falling 1.5% on Friday. Brent's weekly drop was 2.75% last week. US West Texas Intermediate (WTI) crude declined 72 US cents to US$64.73 a barrel, after dropping 0.5% in the previous session. WTI fell by 1% during the last week.

In Malaysia, TA Securities Holdings Bhd wrote in a note today that US interest rate hike expectation could dictate Malaysian share-trade dynamics. "Extreme overbought technical momentum indicators on the FBM KLCI, highlighted by a daily stochastics sell signal, implies higher probability for a long overdue overbought correction this week. Moreover, given the sharp correction on Wall Street last Friday triggered by the stronger-than-expected January jobs data which increased worries over rising US interest rates and inflation risk, a profit-taking pullback should spill over from the region," TA said.