KUALA LUMPUR: Riding the recovery of crude oil prices after an abrupt plunge in the fourth quarter last year, the rotational play among the oil and gas (O&G) stocks on Bursa Malaysia seems to be gathering momentum.
O&G stocks like Sapura Energy Bhd, Bumi Armada Bhd and Velesto Energy Bhd dominated Bursa Malaysia’s most active list yesterday, as the international Brent crude oil recouped some 33% to trade at US$67.01 (RM273.40) a barrel at the time of writing, from the 18-month low of US$50.47 it fell to on Christmas eve last year.
The Energy Index rose 30.52 points or 3.04% — the highest among the bourse’s sub-indices yesterday — as O&G stocks regained favour, following Saudi Arabia Energy Minister Khalid al-Falih’s comment on Sunday that an end to Opec-led supply cuts was unlikely before June.
“The Saudis continue to take a proactive approach to get supply and demand in better balance,” Reuters quoted Andrew Lipow, president of Lipow Oil Associates in Houston, as saying.
The climb of the 28-stock Energy Index drove the FBM KLCI to settle 6.65 points or 0.4% higher at 1,671.28 points.
Sapura Energy was the most actively traded, with 233.41 million shares done. It closed one sen or 3.17% higher at 32.5 sen. It is followed by Bumi Armada, which closed 2.5 sen or 15.15% higher to 19 sen after 191.48 million shares exchanged hands. Velesto settled 2.5 sen or 8.93% higher at 30.5 sen, following 175.14 million shares done.
Oil prices rose after al-Falih was quoted as saying it would be too early to change a production curb pact agreed by Opec and its allies, including Russia, before the group’s meeting in June.
Crude has rallied since the Opec and its allies including Russia, returned to supply cuts as of Jan 1. Brent has jumped 25% after that, Reuters wrote.
A cut in oil exports from Venezuela due to a power outage has also boosted prices. “Venezuela’s state-run oil firm PDVSA has been unable to resume crude exports from its primary port since a power outage last week, people familiar with the matter said on Monday,” it wrote.
However, there is also a surge in US supply, which the International Energy Agency said on Monday would continue to 2024. This, the newswire wrote, would probably require Opec and its allies to keep up their policy of market management.
http://www.theedgemarkets.com/article/energy-stocks-heat-saudi-affirms-opec-oil-cuts
