Tuesday 23 Jul 2024
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KUALA LUMPUR (Sept 18): Shell Refining Co (Federation of Malaya) Bhd shares rose 24 sen or 4% to a high of RM6.14, albeit on thin volume, as crude oil prices fell.

Reuters reported that Brent crude dropped towards $98 per barrel on Thursday, pressured by a stronger dollar on fears about a looming U.S. interest rate increase and a steep spike in U.S. crude stocks.

Poor demand and abundant supplies have pushed down the oil benchmark to a 26-month low earlier this week, and have kept it below $100 for more than a week.

At 12.30pm, Shell Refining settled at RM5.90 with 41,600 shares done.

A remisier said that while Shell Refining's stock price had risen, trading volume remained thin.

“The thin trading volume shows that the market is probably not aware that Shell Refining can get higher margins as a refinery company from lower oil prices.

“However, traders cannot write too much into the small increase in the stock price. The counter itself has not much liquidity and people do not always plunge into buying or selling oil-related stocks merely because of movement in the oil prices,” he told theedgemalaysia.com today.

An oil and gas analyst opined that lower oil prices were “not so good” for refinery companies as it could lead to short-term uncertainty.

“Generally, the market expects that lower oil prices could improve margins for refinery companies. But, in the near term, the impact could be negative.

“Lower oil prices could actually affect market sentiment and people will start speculating on oil prices. This creates uncertainty and as we know, uncertainty is not good for the market,” he said.


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