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One of the hot debate out there will be - How high will be crude oil price rally? With the Covid19 pandemic lingering with us for almost 2 years by now, the oil and gas sector had seen dwindling capex for new oil field development. Even before the impact of Covid19, the sector had previously faced glut from the US shale oil boom which send oil price down from above USD 100 per barrel.


Where are we heading next?




As you can see, the WTI CRUDE OIL FUTURES is running on an uptrend movement. While the recent move might suggest that there might be a retracement from the high, a break above such resistant level might trigger a rush into oil related company in the equity market. My view is that oil price will maintain at the range of USD 80 to USD 90 per barrel with optimistic view that it might breach above USD 100 per barrel next year when the global economy fully reopen from the covid19 lockdown restriction.



Crude oil might see demand more than supply due to several reason

1. Lack of capex investment due to covid19 pandemic


2. Green energy initiative continue to put pressure on capex for new oil and gas field.


3. Renewable energy for the current time being is not able to replace the current fossil fuel energy.


4. Renewable energy cannot provide a consistent energy supply compared to fossil fuel. Weather changes can affect the yield of energy created from those harvesting from sunlight.


5. Winter season to be rocking in earlier than expected in the northern hemisphere, and consumption of energy will be high as more heating equipment will light up to keep warm.


6. Natural gas crisis pushing power plant for other alternative energy which is fossil oil.


Investment Bank forecast Brent Oil to reach USD 90 per barrel

WTI Crude Hits Highest Level In 7 Years | OilPrice.com


BTG’s Esteves, Pimco Warn Inflation’s Not Transitory: FII Update (yahoo.com)




With all this bullish news on crude oil, it will be a good opportunity to hunt into oil and gas related company that are involved in upstream operation such as exploration and development.



As for my choice of pick, I would be looking at UZMA BHD - (UZMA 7250)


The company had some good track record in the past, and with the well supported oil price, I think UZMA will have a good chance in running up again.


UZMA services offered in the oil and gas sector

Uzma - A Malaysian Oil & Gas Company (uzmagroup.com)

- Subsurface solution

- Integrated well solution

- Production solution

- Late life asset decommissioning



The latest share price chart of UZMA signal that the price is ready to rebound from the support line.




With the positive outlook in the oil and gas industry, UZMA will have a valid reason for going higher, and the current position of RM 0.63 will be attractive for an entry.




IMPORTANT NOTICE

Please be informed, I am not a professional or certified analyst. I am not a licensed consultant, just a normal retail investor. I am just sharing my ideas and opinion on the market outlook. Any company mentioned should not be interpreted as a buy/sell/trade call. Please do your own research and buy/sell/trade at your own risk.




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https://targetinvest88.blogspot.com/2021/10/uzma-to-rebound-from-uptrend-support.html
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