KUALA LUMPUR (April 29): Bursa Malaysia’s Energy Index rose more than 3% on the last trading day of April, led mainly by a rally among oil and gas (O&G) refiners, in particular Hengyuan Refining Co Bhd and Petron Malaysia Refining & Marketing Bhd, in line with the spike in crack spreads.
At midday break on Friday (April 29), Bursa’s Energy Index, which tracks the performance of Main Market-listed O&G companies, had risen by 23.93 points or 3.17% to 778.82 points. Year-to-date, the Energy Index had appreciated by 10.03%.
Hengyuan and Petron Malaysia, on the other hand, had rallied 57 sen (10.94%) and 25 sen (4.76%) to settle at RM5.78 and RM5.50, respectively.
Both refiners also saw heightened trading interest in Friday's morning trading session, as Hengyuan and Petron Malaysia saw 9.33 million shares and 1.37 million shares changed hands.
Another O&G producer Hibiscus Petroleum Bhd also benefited from the refiners’ rally as it was six sen or 4.92% higher at RM1.28.
This comes as Reuters reported on Thursday that Asian oil refiners are reaping their highest profits ever in the last week of April, spurred by higher fuel demand during peak holiday seasons as more economies recover from the Covid-19 pandemic, while the region ramps up exports to Europe to replace a Russia shortfall.
Reuters also reported that profit margins for complex refiners in Singapore — the bellwether for Asian refiners — had tipped over US$20 a barrel on Wednesday while crack spreads for gasoline, diesel and jet fuel had set fresh record highs of US$22.28, US$47.53 and US$37.38 per barrel respectively on Thursday, as transportation returns to form amid easing of pandemic containment measures across the globe.
Earlier this month on April 4, rating agency Moody’s Investors Service had also said Asian refining margins will remain buoyant in 2022 as easing movement restrictions boost demand for transportation fuels, while uptake for Asian fuels from Europe has increased due to international sanctions on Russia.
It noted that at the same time, supply has fallen due to significant refinery closures last year, coupled with decreased fuel exports from China.
Strong demand for transportation fuels amid a supply shortfall would drive refining margins even as a recent surge in crude prices bolsters feedstock costs, Moody’s added.