Oil rally sparking huge interest in Malaysia Oil and Gas

The rise in the price of crude oil to a four-year high of US$80 (RM331.20) a barrel has lifted over 20 oil and gas (O&G)-related stocks on Bursa Malaysia.

Bloomberg data shows five stocks have risen over 12% since Monday to the close of market yesterday as crude oil prices extended gains on prospects of tighter global supply availability, while 15 others rose between 1% and 10%.

The stock that has increased the most over the span of three trading days was Deleum Bhd which closed at RM1.14 yesterday, 16.92% higher than its close last Friday of 98 sen a share.

The company had recently secured three new contracts from Petronas Carigali Sdn Bhd, Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd for provision of integrated corrosion solution and oilfield services.

Deleum has a market value of RM461.29 million and its stock had returned 27% year-to-date, trading at 14 times its estimated earnings per share for the coming year.

Upstream player Hibiscus Petroleum Bhd closed 17 sen, or 15.89% higher, at RM1.24 as the counter was the most actively traded on the market yesterday with 90.4 million shares exchanging hands.

Reach Energy Bhd was another upstream player that attracted investor interest as it rose 13.92% since the oil price hiked, and 75% in the past month. It returned 8.5% so far this year and recorded a gain of 6% in the past 52 weeks.

Four out of the seven most active counters on the local bourse yesterday were O&G-related.

Hong Leong Investment Bank Bhd’s (HLIB) traders brief yesterday noted the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) may see extended profit-taking activities over the near term and trading interest will be seen within O&G stocks as the Brent crude oil contract price is hovering steadily above the US$80-abarrel level.

Oanda Corp head of Asia-Pacific trading Stephen Innes said if OPEC does not ramp up production, oil prices have the legs to run further as this will be viewed as an extremely bullish signal for near-term prices.

“Oil markets remain well-supported in Asia, despite the unexpected 2.9 million barrels build in the American Petroleum Institute report.

“While US inventory data counts oil, prices stay in the bulls domain amid concern US sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November,” he said.

Innes added that markets could still be underestimating the supply crunch from US sanctions.

The Malaysian Reserve

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

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