O&G counters rise as global crude oil prices climb

This article first appeared in The Edge Financial Daily, on November 10, 2017.
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KUALA LUMPUR: Oil and Gas (O&G) stocks had a good day on Bursa Malaysia as they rose yesterday as global crude oil prices continued on an upward trajectory, with Brent crude oil price futures touching a 2.5-year high.

On Oct 27, crude oil price broke past the US$60 (RM113.94) per barrel level for the first time since June 2015. At the time of writing, crude oil prices were trading at US$63.45 per barrel. Brent crude oil futures last traded at US$63.44 and have gained more than 40% since July.

“This [rally] is largely caused by the higher global crude oil prices,” MIDF Research analyst Aaron Tan told The Edge Financial Daily.

The rally also lifted the benchmark FBM KLCI, which rose 2.61 points or 0.15% yesterday at 1,746.81 points, with Petronas Gas Bhd, Hengyuan Refining Co Bhd, and Petron Malaysia Refining & Marketing Bhd among the top gainers.

Inter-Pacific Securities research head Pong Teng Siew told The Edge Financial Daily that the refineries’ stocks are up on the back of stockholding gain. “Refiners store about up to four weeks of oil in their tanks. Hence, if oil prices climb significantly, they can claim inventory gain,” he said.

Pong also forecast that oil prices will continue to climb on a week-to-week basis.

“I don’t know what levels it will reach. But there are a lot of speculative demands in the futures market, and [the prices] are climbing faster than demand,” he said.

Hengyuan Refining counter was the third top gainer on Bursa Malaysia. It climbed 59 sen or 6.35% to a five-year high of RM9.88, after 3.54 million shares changing hands, giving it a market capitalisation of RM2.89 billion.

Petron Malaysia shares were up 54 sen or 4.43% to hit an all-time high of RM12.74, after 740,700 shares were traded, with a market capitalisation of RM3.44 billion. It was the fourth top gainer on Bursa Malaysia.

Petronas Gas was the second top gainer on the local bourse, after rising 64 sen or 3.75% to RM17.70, with 4.01 million shares traded, lifting its market capitalisation to RM35.26 billion.