Oil & gas stocks dominate the local bourse

PETALING JAYA: Oil and gas (O&G) stocks continued to be the focus on Bursa Malaysia and saw some declines yesterday, tracking the movements of the broader oil markets.

The stocks continued to dominate the list of active counters on the local bourse. They included Hibiscus Petroleum Bhd, which fell 1.5 sen to 65 sen; Sapura Energy Bhd, which fell 10 sen to RM1.61; UMW Oil & Gas Corp Bhd, which declined one sen to 30.5 sen; and Carimin Petroleum Bhd and Icon Offshore Bhd, which closed unchanged at 55 sen and 30.5 sen, respectively.

Local traders woke up to news that oil prices had fallen some 1% after investors in oil took profits following a rally to 26-month highs, spurred largely by threats from Turkey to cut crude exports from Iraq’s Kurdistan region.

Reuters reported that the market was also under pressure ahead of weekly US oil inventory data that is expected to show a fourth straight week of crude builds.

Oil prices, however, recovered some of these losses yesterday and still hovered near their 26-month high, with Brent crude oil for November delivery rising 0.34% to US$58.64 a barrel as at press time.

“I think there is a reality check here and some traders have begun to take profits. Some stocks such as Hibiscus and Carimin had seen a sudden surge in price by more than 60% in less than a week. Whether this was backed by actual fundamentals catching up or not is another question that has yet to be answered,” a dealer with a local brokerage said.

Sapura Energy yesterday also reported that its net profit had fallen 74.2% to RM28.92mil in the second quarter ended July 31, due to losses from the drilling business and the cessation of the Berantai risk service contract.

The O&G services company said that net profit had fallen from RM112.26mil a year ago. Its earnings per share fell to 0.49 sen compared with 1.89 sen previously.

In its research note yesterday, Public Investment Bank (PIB) said the recent rise in oil prices has put the Brent crude oil price within sight of the US$60 per barrel mark, and thus reinforces its “overweight” stance on the sector.

“This is premised on the stabilisation of prices at higher levels, thereby encouraging a return in activity. Our average Brent oil price levels are estimated as follows: 2017 – US$50 per barrel and 2018 – US$55 per barrel,” PIB said.