KUALA LUMPUR (Jan 12): Oil refineries, namely Shell Refining (Federation of Malaya) Bhd and Petron Malaysia Refining and Marketing Bhd (PetronM) are bucking the trend of the falling crude oil prices to rise in the morning trade.

Shell rose RM1.00 or 19.60% to a high of RM6.10 this morning, but gave up the gains to trade at RM5.93 apiece, up 83 sen or 16.27% at 11.21am. The counter saw 1.1 million units changed hands.

PetronM also rose as much as 8 sen or 1.17%  to RM6.93 with 1.44 million shares traded as at 11.00am. The stock has earlier gone up to RM7.31 before it pared down the gains.

Kenanga Research analyst Lim Sin Kiat said that the positive sentiment towards Shell and PetronM because the two companies had turned profitable from losses a year earlier.

In addition, he opined that the refineries are in for a better year in 2016 as the selling price of oil products were not going down as much as the crude oil price, and had reached to a point where it is profitable to the refinery.

“When the crude oil price was traded at US$100 per barrel, the pump prices did not go up very high, and with the crude oil prices coming down, the pump prices did not go down as much, now they are getting the good side of it,” he added.

He said, the sustainability of this situation will depend on the supply of the oil product, but he believed the government will not cut the pump price so fast and so severe.

He added that earlier the crude oil was traded at US$ 40-50, now it is between US$30-40, there is a saying that it would go down further to US$20 per barrel, so the refinery is in for a good year in 2016.

As at 11.19am, Brent Crude Oil was traded at US$31.19 per barrel, down 1.14%.

Crude oil prices continued a relentless dive early on Tuesday approaching a 20% drop since the beginning of the year as analysts scrambled to cut their 2016 oil price forecasts and traders bet on further price falls, Reuters reported.

Meanwhile, the other downstream oil and gas counter such as Petronas Chemicals Group Bhd(Petchem) and Petronas Dagangan Bhd (PetDag) also rose in morning trade today.

Petchem increase as much as 21 sen or 2.92% to RM7.41, with some 2.2 million shares traded as at 11.10am.

Meanwhile, PetDag increased marginally by 2 sen to RM23.92,with 177,000 units done.

Lim said that PetChem could be rise in tandem with the positive sentiment against the downstream oil and gas counter.

“All the downstream oil and gas counter will fare better than the upstream oil and gas counters this year,” Lim added.