Highlight O&G counters among top active stocks following 6% jump in oil prices

by **Cals** Wed 24 Feb 2016, 03:16

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[size=28]O&G counters among top active stocks following 6% jump in oil prices

By Meena Lakshana / theedgemarkets.com | February 23, 2016 : 11:37 AM MYT

KUALA LUMPUR (Feb 23): Oil and gas (O&G) counters were among the top actively traded stocks this morning after crude oil prices ended 6% higher yesterday.

At 10am, Perisai Petroleum Teknologi Bhd saw its shares gain 0.5 sen or 1.75% to 29 sen, with 13.61 million shares traded. It was the eighth top active stock on the local bourse.

SapuraKencana Petroleum Bhd shares climbed 4 sen or 2.03% to RM2.01, with 5.6 million shares done; while Hibiscus Petroleum Bhd rose 0.5 sen or 2.63% to 19.5 sen with 4 million shares traded.

Bumi Armada Bhd was up 1 sen or 0.96% at RM1.05, with 3.73 million shares transacted.

When contacted, Public Investment Bank Bhd analyst Mabel Tan said the rise in a majority of O&G stocks was due to sentiment play on the back of the overnight surge in oil prices.

However, she said the rally in the stocks will be short-lived as there are still uncertainties in production and inventory levels, which is placing downward pressure on oil prices.

"Do note that many oil companies are still undergoing historic investment cuts as well, therefore raising possibility of further unpleasant surprises," she added.

Kenanga Investment Bank Bhd analyst Sean Lim said the trading of upstream O&G stocks will remain volatile as interest in the stocks reacts to crude oil prices.

He also said crude oil prices are expected to stage a better recovery in the second half of the year, as United States (US) shale oil production is expected to fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017 while the Organization of the Petroleum Exporting Countries (OPEC) has roped in some of its member states to control output of crude oil.

However, he said both these developments are unlikely to quell the oversupply of crude oil in the market.

"There are still factors that may shadow a strong recovery in oil prices, such as extra production from Iran and record high inventories in the US," he added.

Reuters reported today that oil prices closed 6% higher yesterday as speculation about falling US shale output and a rally in equities fed the notion that crude prices may be bottoming after a 20-month collapse.

Oil prices have been in a recovery mode since last week after Saudi Arabia and fellow OPEC members Qatar and Venezuela agreed with non-OPEC member Russia to freeze output at January's highs, the report stated.

However, Iraq, a key member of OPEC, said yesterday it planned to raise production to above 7 million bpd over the next five years and export 6 million bpd of that, while Iran, OPEC's fourth largest producer, has repeatedly pledged to raise its output too to pre-sanctions levels.

The April 2016 futures contract of West Texas Intermediate (WTI) crude oil is currently trading 45 US cents or 1.35% at US$32.94 per barrel while the Brent crude oil contract is also trading 45 US cents or 1.3% lower at US$34.24 per barrel.

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