Thursday 28 Mar 2024
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KUALA LUMPUR: Oil and gas (O&G) stocks on Bursa Malaysia rallied yesterday, as Brent crude hit a 2015 high of above US$63 (RM230) per barrel.

At market close yesterday, O&G big caps SapuraKencana Petroleum Bhd (fundamental: 1.3; valuation:1.4) closed eight sen or 3.08% higher at RM2.68,  UMW Oil and Gas Corp Bhd (fundamental: N/A; valuation: N/A)’s counter closed one sen, or 0.41% up at RM2.45, while shares of Dialog Group Bhd (fundamental: 2.1; valuation :0.5) rose five sen, or 3.09% to close at RM1.67.

Mid-cap O&G players had also reacted positively to the surge in Brent crude oil. Shares of KNM Group Bhd (fundamental: 0.85; valuation: 1.5) were up 1.5 sen, or 2.21% to finish at 69.5sen yesterday, while Deleum Bhd (fundamental: 1.7; valuation: 2.1) was up four sen or 2.29% at RM1.79.

Similarly, shares of Coastal Contracts Bhd (fundamental: 2.6; valuation: 1.8) rose by three sen, or 1.02%, to close at RM2.98 while Dayang Enterprise Holdings Bhd (fundamental: 2.7; valuation: 2.1) rose one sen, or 0.39%, to close at RM2.59, and Perisai Petroleum Teknologi Bhd (fundamental: 0.45; valuation:1.1) rose 0.5 sen, or 0.87%, to 58 sen.

A remisier with a local investment bank told The Edge Financial Daily that the leap in O&G stocks is most probably related to the surge in crude oil.

“However, there was some profit-taking activity yesterday as a result of the jump in oil prices, which may have caused the decline in counters such as Bumi Armada Bhd (fundamental :1.05; valuation: 0.8) which was down three sen, or 2.5%, to RM1.17,” he told The Edge Financial Daily.

According to Reuters, oil prices in the United States jumped on Wednesday after US inventories built up more slowly than expected, although still a new record.

“Talks among major oil producers also triggered speculation of production cuts, even though most analysts said these were unlikely,” said Reuters.

Reuters technical analyst Wang Tao was quoted as saying at the Global Oil Forum that Brent crude oil could rise towards US$70 a barrel in the near term, but that a sharp downturn could happen after that.

Brent crude, which had been trading around the US$115 level last June, had fallen 60% to almost US$45 in January this year.

According to Reuters, the recent price rise means the US oil market has firmed up into its best shape this year, as ebbing fears of an inventory overflow and renewed hedging in far-distance futures flattens the forward curve, a possible sign that a months-long rout might be over.


The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Financial Daily, on April 17, 2015.

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