O&G counters on downtrend

The award had stirred criticism, stemming from the connection of Petron to Prime Minister Tun Dr Mahathir Mohamad

PETALING JAYA: Tumbling crude oil prices against an oversupply backdrop have caused local oil and gas (O&G) related counters to slide.

Despite that, the overall market rebounded after a bout of losses over the past several days.

O&G services provider Dialog Group Bhd was the biggest loser on Bursa Malaysia yesterday, down 6.8% to RM2.75, on a volume of 44.3 million shares.

Meanwhile, Sapura Energy Bhd was the highest volume traded at 100.52 million shares, dipping 1.7% to 29.5 sen.

Hibiscus Petroleum was down 8.1% to 79 sen, Bumi Armada lost 3.2% to 15 sen, and Yinson shaved 2.6% to RM4.19. Petronas Dagangan fell 12 sen to RM25.60, Petronas Gas eight sen to RM19.20 and Petronas Chemical two sen to RM9.13.

Crude oil prices have been on a steep downtrend since October, down 34.2% from a high of US$85.89.

It fell on concerns of oversupply from the Middle East, Russia and the United States.

According to wire reports, the decline in prices was driven by falling global stock markets which reacted to an expected slowdown in economic growth and worries of a US interest rate hike.

As at 5pm yesterday, US light crude oil recovered to climb 21 cents to US$46.45 and Brent added 37 cents to US$56.63.

However, on Tuesday, US crude was down 3.17% or US$1.58 to US$48.30 and Brent sliding 3.19% or US$1.90 to US$57.71.

With the government’s budget forecasting crude oil prices at US$70 per barrel, further tumbling of prices will make it more challenging for the financing of Budget 2019.

Petronas had raised its assumed oil price on a planning basis to between US$60 and US$70 per barrel for 2019.

Maybank Investment Bank Research, in a recent report, remained positive on the Malaysian oil and gas sector.

Based on Petronas’ activity outlook report for 2019 to 2021, the research house expects majority of domestic O&G activities across the services value chain, to be on the rise.

“We see Velesto, MMHE and offshore support vessels players like Icon Offshore Bhd and Alam Maritim Resources Bhd as key beneficiaries from the improving domestic landscape.

“While that denotes improved utilization for the services providers, day rates will be flattish,” said Maybank IB Research.

The FBM KLCI rose 20.35 points or 1.24% to a close of 1,655.66 points yesterday, led by blue chips Sime Darby Plantation Bhd and Public Bank Bhd.

Sime Darby Plantation gained 33 sen to RM4.42 and pushed the KLIC up 3.97 points, while Public Bank gained 40 sen to RM24.66 and lifted the KLCI up 2.74 points.

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