Uptrend seen for oil refiners
Crude prices hover near two-year high
PETALING JAYA: Oil refiners are getting all the love from investors even as drivers braced for another dose of painful fuel price hike at local pump stations with the crude oil prices in the international market hovering near a two-year high.
In the market yesterday, shares in Hengyuan Refining Company Bhd climbed 11 sen, or 1.3% to close at RM8.47 with 2.137 million shares transacted.
The stock is within sight of its Aug 21 peak of RM8.59.
It had surged 320% so far this year, buoyed by expectation that rising fuel prices will boost its profits.
Meanwhile, bigger rival Petron Malaysia Refining & Marketing Bhd jumped 20 sen, or 1.7% higher yesterday to close at an all-time high of RM11.70 on thin volume.
Shares in Petron, which is the third-largest petrol pump station operator in Malaysia and also owns an 88,000 barrels per day refinery, had surged almost 200% so far this year.
RHB Research Institute, earlier this month, initiated its coverage on the stock with a target price of RM16.20.
It said that Petron’s retail business offered a stable earnings base for the company, while its commercial fuel division will provide the boost as the company benefited from the weekly fuel price adjustment.
The price of Brent crude futures had surged 27% since the end of June, which translated into higher prices of fuel at local pump stations.
For example, the price of RON95 petrol in August averaged at RM2.11 per litre whereas in September, the average price was RM2.18.
Moving forward, average Brent oil price and RON95 for the first three weeks of October registered at US$56.8 and RM2.17 respectively.
Global benchmark Brent crude this month topped US$60 a barrel for the first time since 2015 on hopes the Organisation of the Petroleum Exporting Countries and partners including Russia will prolong their curbs aimed at eliminating a glut.
Prices were also boosted by fighting between Iraqi government troops and Kurdish forces in the oil-rich Kirkuk region. Still, the potential for continued supplies from US shale fields is a concern.
The Brent crude traded at a premium of more than US$6 to the US benchmark West Texas Intermediate crude, which was little changed yesterday at US$54 a barrel.