Thursday 28 Mar 2024
By
main news image

KUALA LUMPUR (May 3): The current volatile oil prices, coupled with the International Energy Agency's (IEA) statement on its website last week that painted a bleak outlook for the sector, led to decline in some oil and gas (O&G)-related stocks this morning.

Hong Leong Investment Bank research analyst Lim Sin Kiat said that for today, the outlook for all O&G counters was dim.

"The O&G counters are partly affected by the IEA statement but it is more on the outlook of the O&G counters which is expected to be dim in this meantime," he told theedgemarkets.com.

However, Lim said there will be an improvement in oil price by the second half of 2017 (2H17).

The IEA said global oil discoveries fell to a record low in 2016 as companies continued to cut spending and conventional oil projects sanctioned were at the lowest level in more than 70 years, and also warned that both trends could continue this year.

"Oil discoveries declined to 2.4 billion barrels in 2016, compared with an average of 9 billion barrels per year over the past 15 years," it said.

Inter Pacific Securities research head Pong Teng Siew said the drop in O&G counters today was because of the quite substantial drop in oil price recently as well as the IEA outlook statement.

"In the near term, the exploration in O&G activity is falling and there will be a negative impact on the O&G counters," he said when contacted by theedgemarkets.com.

However, Pong said O&G counters should recover as oil prices are setting up to rebound.

"New projects fell because of the cash flow. When the oil prices dropped, cash flow got affected, hence most of the O&G players cut on the expenditure on O&G projects," he added.

The benchmark for global oil market, Brent futures gained 56 US cents, or 1.1% to US$51.02 a barrel by 0156 GMT. US West Texas Intermediate crude rose 48 US cents or 1% to US$48.14 a barrel, according to Reuters today.

At the midday break, some of the O&G stocks that declined included Sapura Energy Bhd, which fell 3 sen or 1.49% to RM1.99; Bumi Armada Bhd, down 0.5 sen or 0.63% at 79 sen; while Dialog Group Bhd declined two sen or 1.03% to RM1.92.

 

      Print
      Text Size
      Share