KUALA LUMPUR: RHB Research is expecting the regional oil and gas market to achieve a better balance in the medium-term with a narrowing of the supply deficit.
"Based on our assumptions, we expect a relatively balanced market in 2023, with the estimated quarterly deficit-to-surplus ranging from -0.7mbpd to +0.8mbpd.
"Therefore, it is reasonable to assume that oil prices may stay above US$80/bbl," it said in its regional sector update.
It added that a weak economic outlook or recession would bring down global demand significantly, although Opec's commitment to cut production could provide strong support for oil prices.
The research firm, which remains "overweight" on the regional sector, said it was lowering its 2023 Brent crude oil forecast to US$88 a barrel from US$90 a barrel and but maintained its 2024-2025 projections at US$80 a barrel.
"Our 1Q23 estimate drops to US$85/bbl as it will take some time before the impact of China’s border reopening is felt – it may pick up in 2Q23-3Q23," it said.
For the coming year, RHB expects overall global crude oil demand to remain healthy with a positive growth of 2.2mbpd.
"Note that apart from global economic uncertainties, there is also an increased risk of a supply disruption following the commencement of the EU embargo on Russian oil and the implementation of a price cap.
"For now, we may see a sudden decline in crude exports, but these should eventually be re-routed to other countries as time goes by – premised on the overall global demand being largely unaffected still."
RHB expects oil companies to maintain capex and opex spending plans, which will benefit upstream service providers such as Yinson Holdings Bhd
, Dayang Enterprise Holdings Bhd and Coastal Contracts Bhd
The overall expectations of upstream activities by service players remains fairly robust and a potential increase in rates for new contracts to cater for the rising cost of materials, it added.
For Thailand, RHB's top picks are PTTOR and Bangchak Corp, on the basis of their oil and retail business recovery, which would in turn be supported by their nationwide oil and retail service branches in Thailand and neighbouring countries.
