PETALING JAYA: Positive supply and demand fundamentals are expected to keep oil prices supported at or above the US$78 a barrel level in the first half of the year (1H25), according to MIDF Research.
However, the Organisation of Petroleum Exporting Countries would have the final say on where prices head, the research house added.
MIDF Research said the latest US sanctions on Russian oil production and China’s demand, as well changes that could happen under the Trump administration could impact the price outlook.
Crude prices are being supported by the current cold weather in the Northern Hemisphere and are anticipated to remain up through 1H25 due to the anticipation of a higher prevalence the La Nina weather phenomenon this year, it added.
“We believe the spike will not last longer as it did in 2022, during Russia’s invasion on Ukraine, due to the uncertainties surrounding the conditions of the sanctions and the implications of the energy policy changes under the Trump administration,” MIDF Research wrote in a sector report.
It maintained its average forecast for Brent crude at US$78 a barrel at this juncture.
The research house said it expects upstream and midstream oil and gas companies to offer the best exposure for investors due to their resilience and encouraging outlook for the upstream segment.
“With the recent discoveries in global oil and gas reserves, as well as the higher demand for liquefied natural gas (LNG), we think that these subsectors will remain sanguine. We are maintaining our cautious view on the downstream segment, as higher Brent prices would surge feedstock prices for petrochemicals, subsequently risking the supply-demand dynamics,” MIDF Research said.
The research house has “buy” calls on Dialog Group Bhd
with a target price of RM2.72 a share, Bumi Armada Bhd at 84 sen, Deleum Bhd at RM1.62, Malaysia Marine & Heavy Engineering Holdings Bhd at 65 sen, MISC Bhd at RM8.95, Gas Malaysia Bhd at RM3.96 and Petronas Gas Bhd at RM19.44.
Its top pick is MISC, on the grounds that its floating production storage and offloading business and offshore operations stand to benefit from elevated crude oil prices and proposed merger of its offshore unit with Bumi Armada.
