PETALING JAYA: Global oil demand is expected to be on a rising trajectory underpinned by the weaker US dollar.
Brent crude, the global oil benchmark, rose by 0.8% to US$67 (RM276) yesterday.
AmInvestment Bank Research said global exploration and production capital expenditure cycle would improve over the next two to three years.
Given that the Brent crude price has remained above US$60 per barrel over the past weeks as Opec+ announced gradual production increments of 350,000 barrels from May to June and 441,000 barrels in July, AmInvestment said it has raised its crude oil price forecast from US$55 to US$60 per barrel to US$60 to US$65 per barrel for 2021 and 2022.Brent has averaged to US$61 per barrel since the beginning of the year.
For comparison, the Energy Information Administration is projecting oil prices at US$62 per barrel for 2021 and US$60 for 2022.
“In Malaysia, the first quarter order flows have improved quarter-on-quarter with listed companies announcing contracts valued at RM3.3bil – a 2.2 times increase from RM1.5bil in the preceding quarter.
“Year-on-year, this represents a rapid surge of 5.6 times from only RM569mil in Q1’2020, due to the onset of the Covid-19 pandemic together with the shortlived Saudi-Russia oil war, ” the research house added.
The research house is maintaining its “overweight” call with eight “buy” calls versus one “hold”.
“We recommend Yinson Holdings Bhd for its strong earnings growth momentum from the full-year contribution of its floating production, storage and offloading (FPSO) vessels Helang, off Sarawak, Abigail-Joseph in Nigeria and Anna Nery in Brazil together with multiple charter opportunities in Brazil and Africa.
“Our other ‘buy’ calls are Sapura Energy, which has just completed its RM10bil debt restructuring package and re-positioned the formidable engineering, procurement, construction, installation and commissioning group to secure fresh global orders, and Petronas Gas, which offers highly compelling dividend yields from its optimal capital structure strategy and resilient earnings base, ” AmInvestment added.
Meanwhile, Rystad Energy, a global energy research and business intelligence company, said the rapid market penetration of electric vehicles (EVs) is accelerating the current energy transition and would drive up battery demand for both transportation and grid storage.The share of EVs in global new passenger car sales is expected to quadruple in 2026 from 4.6% last year and exceed 50% from 2033 onwards, then climb gradually towards 100% by 2050 in nearly all regions except Africa. This would structurally transform the oil and gas industry given that road transportation accounts for over 40% of crude oil consumption in 2019, the company said.
In 2021, Rystad Energy expects EVs to take up around 6.2% of global passenger car sales, with the share climbing to 7.7% next year. Europe will continue to lead electric vehicle adoption with the highest EV sale share of 10% in 2021, and double to 20% in 2025.