PIVB reinforces ‘overweight’ view on oil & gas sector

KUALA LUMPUR: Public Investment Bank Bhd (PIVB) has reinforced its “overweight” view on the oil and gas (O&G) sector after the overnight benchmark Brent crude oil price closed at US$58.44 per barrel, hitting its highest levels since July 2015.

In a note yesterday, the research house said the uplifted prices were mainly supported by Turkey’s threat to turn off a pipeline through northern Iraq, and the buildup on previous worries of United States refineries hit by the hurricane season.

“These have put Brent crude prices within sight of the US$60 per barrel mark, and thus we reinforce our ‘overweight’ view on the sector, premised on the stabilisation of prices at higher levels, thereby encouraging a return in activity,” it said.

Moving forward, PIVB estimated the average Brent crude oil price to trade at US$50 per barrel for 2017 and US$55 per barrel for 2018.

“Crude oil prices are expected to stabilise. Our estimates are premised on the average year-to-date Brent crude oil prices and its futures to quote at US$52.40 per barrel and US$49 per barrel respectively, for the second half of 2017 to balance the year at our estimated US$50 per barrel for this year.

“We opine the industry is more focused on robust activity at stable oil prices, rather than very high crude oil prices at this juncture which may not be sustainable,” it said. — Bernama