KUALA LUMPUR (Feb 14): Bursa Malaysia’s Energy index rose about 2% on Monday (Feb 14) to become the top percentage gainer among bourse gauges after global crude oil prices surged past US$96 a barrel to their highest in more than seven years as investors weighed a potential crude oil supply disruption due to a possible invasion of Ukraine by Russia.
At Bursa’s 12.30pm break, Bursa’s Energy index, which tracks share prices of oil and gas (O&G)-related companies, settled up 13.55 points or 1.72% at 802.34.
It was reported that oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger US and European sanctions that would disrupt exports from the world's top producer in an already tight market.
Brent crude futures was at US$95.56 a barrel by 0235 GMT, up US$1.12, or 1.2%, after earlier hitting a peak of $US96.16, the highest since October 2014.
U.S. West Texas Intermediate (WTI) crude rose US$1.28, or 1.4%, to US$94.38 a barrel, hovering near a session-high of US$94.94, the loftiest since September 2014.
"Comments from the US about an imminent attack by Russia on Ukraine have rattled global financial markets.
"Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the US said on Sunday (Feb 13),” Reuters reported.
In Malaysia on Monday, RHB Investment Bank Bhd analyst Sean Lim wrote in a note that RHB, which maintained its “overweight” call on Malaysia and Thailand's O&G sector, has raised RHB’s Brent crude oil price forecasts to US$90 and US$75 a barrel for 2022 and 2023 respectively, from US$83 and US$70 previously to reflect the heightened geopolitical tension between Russia and Ukraine, and the continuous shortfall in meeting the Organisation of the Petroleum Exporting Countries’ (Opec) production quota.
"Near-term oil prices could be fuelled by the continuous heightened geopolitical tensions. Oil prices could potentially hit US$110-US$120 /bbl if Russia decides to invade Ukraine, and these could stay elevated for longer, depending on the magnitude of the event.
“(RHB is) overweight on Malaysia and Thailand’s O&G sectors. Exploration & production and petrochemical companies should continue to enjoy strong earnings, while riding on stronger commodity prices. Service providers should gradually benefit from a pick-up in activities and increased domestic capex (capital expenditure) allocations,” he said.
Lim said RHB’s top picks for the Malaysian O&G sector are Petronas Chemicals Group Bhd and Bumi Armada Bhd.
Meanwhile, TA Securities Holdings Bhd analysts wrote in a note on Monday that key beneficiaries of the Russia-Ukraine tension-driven market volatility will be shares of plantation and O&G companies as commodity prices surge.
"Sector wise, the banking, plantation, O&G, consumer and technology-related stocks should continue to attract bargain hunters with the sustained firm CPO (crude palm oil) and crude oil prices supporting bullish sentiment, and also due to economic recovery plays,” TA Securities said.