KUALA LUMPUR: Most second and third liner oil and gas (O&G) stocks felt the heat following a drop in crude oil prices to below US$80 a barrel for the first time since September 2010.
TH Heavy Engineering was down five sen to RM0.47, Scomi slid one sen to RM0.31, while Perisai Petroleum and KNM fell two sen each to RM0.73 and RM0.70 respectively.
However, SapuraKenchana gained one sen to RM3.10, Bumi Armada was also up one sen to RM1.37, while Dialog was unchanged at RM1.55.
A BIMB Securities analyst told StarBiz TH Heavy was down due to the announcement made by its CEO that the percentage of projects for the company had reduced substantially. He also said that there was a lack of market sentiment in the O&G sector. “It is more to do with market sentiment, yet there are O&G counters that are upstream which would not be directly affected by falling oil prices,” the analyst added.
He pointed out there had been a drastic drop in oil prices from a high of US$115 a barrel in June “which is not based on fundamentals but based on profit-taking by traders.”
“The outlook for oil prices in the first half of next year is around US$80-US$85 per barrel,” he added.
A RHB Research analyst said Malaysian companies that were directly affected by crude oil price volatility were those that owned production-sharing contracts (PSCs) and risk-sharing contracts (RSCs) as both were involved in crude oil production.
He added that owners of PSCs would be more affected than RSC owners, as they owned equity stakes in the oil field while RSCs would be paid fees for every barrel produced.
Over the next 12 to 24 months, RHB Research said it expected crude oil prices to average around US$95 per barrel.