Friday 29 Mar 2024
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KUALA LUMPUR (Nov 4): Oil and gas stocks SapuraKencana Petroleum Bhd (SKPetro) and Dayang Enterprise Holdings Bhd were among the day’s top losers as Brent crude tumbled to US$84 a barrel today, after top oil exporter Saudi Arabia cut oil prices to the US.

Plantation companies Kuala Lumpur Kepong Bhd (KLK) and Genting Plantations Bhd (GENP) were also in the top loser category, following the fall in crude oil prices.

As at 3.03 pm today, SKPetro lost 13 sen, or 3.83% to RM3.26, Dayang fell by 8 sen, or 2.72% to RM2.94. KLK dropped 24 sen, or 1.05% to RM22.66 and GENP fell by 14 sen, or 1.3% to RM10.56.

According to a Reuters report, the cut had hammered oil prices on Monday as it underscored Saudi efforts to fight for market share in the world’s largest oil consumer, while raising prices to Asia and Europe.

“Brent was down 65 cents at US$84.13 a barrel by 0531 GMT, and had dropped US$1.08 on Monday, its biggest daily loss in nearly two weeks,” said the report.

It also quoted Daniel Ang, an investment analyst with Phillip Futures, as saying that the price cut clearly reiterates the fragile state of the crude market now as major players try to survive in this oversupplied market.

Ken Hasegawa, a commodity sales manager at Newedge Japan, was also quoted in the report as saying that the West Texas Intermediate could fall further towards the 2012 low of US$77.28, and Brent should weaken correspondingly.

However, MIDF Research opined that the market had over reacted to news of the Saudi move.

“As much as global oil prices are perceived to affect the local oil and gas industry, we believe there is no strong correlation, as most Malaysian oil and gas companies are services providers that are not directly involved in the extraction of oil,” MIDF told TheEdge Markets.com

Another bank-backed analyst echoing similar sentiments also sounded a reminder that drilling costs differed from company to company.

“ Saudi Arabia's move is to try to place pressure on US shale-oil producers, who have ramped up their production of late, which has largely contributed to the fall of global oil prices,” the analyst told theedgemarkets.com

As for plantation stocks' losses today, market observers said they were due to anticipation of less demand for CPO as feedstock for biodiesel production, in tandem with lower crude oil prices.

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