KUALA LUMPUR (Sept 4): Oil and gas (O&G) stocks were among the most active on Bursa Malaysia’s afternoon trading session on Monday (Sept 4), as crude prices trended higher amid declining inventories and production cuts, with Brent crude currently hovering near US$89 a barrel. 

At noon break, Bursa Malaysia's Energy index, which tracks share prices of oil and gas-related companies, finished up 14.05 points or 1.64% at 870.19. 

The fourth active stock, KNM Group Bhd, recorded a trading volume of 57.5 million, more than double its 200-day average of 22.95 million. The stock rose 5.26% or half a sen to 10 sen, and had a market value of RM384.36 million. 

Velesto Energy Bhd increased by 8.51% or two sen to 25.5 sen for a market value of RM2.05 billion, with a trading volume of 51.18 million. The counter has risen 70% year-to-date (YTD).

Meanwhile, Bumi Armada Bhd expanded 2.83% or 1.5 sen to 54.5 sen, giving it a market capitalisation of RM3.23 billion.  

Perdana Petroleum Bhd, which has risen over 103% YTD, traded unchanged at 28.5 sen with a market capitalisation of RM577.1 million. Its parent Dayang Enterprise Holdings Bhd slipped two sen or 1.08% to RM1.83, from its three-year high of RM1.85 last Friday (Sept 1), valuing it at RM2.12 billion.

Hibiscus Petroleum Bhd, on the other hand, inched up 0.98% or one sen to RM1.03. Its market capitalisation stood at RM2.07 billion. 

“O&G counters may see some action today (Monday) as crude oil prices are trending higher, in view of the decline in inventory and cut in production, with the Brent crude currently hovering near the US$89/barrel,” said Rakuten Trade Sdn Bhd.  

 Brent crude was up by 0.03% to US$88.58 a barrel, while WTI crude was up by 0.09% to US$85.63 a barrel, according to Bloomberg data. 

Kenanga Research, which maintained its “neutral” stance on O&G, said it continues to be positive on the sector due to sustained traction in O&G capital expenditure (capex) spend, which leads to strong daily charter rates (DCRs), fleet utilisation and new contract awards for upstream providers. 

The research house expects sustained traction in O&G contract flows, on the back of resilient oil prices and anticipation of a ramp-up in capex by Petroliam Nasional Bhd (Petronas), it said in a note dated Sept 1. 

Petronas’ capex in the first half ended June 30, 2023 (1HFY2023) increased 13% YTD to RM21.4 billion, the highest capital expenditure for the group since 1HFY2016. To recap, Petronas is targeting RM300 billion in capital expenditure over the calendar year 2023 to 2027.

Kenanga said it is also positive on the O&G sector, as the global floating production storage and offloading (FPSO) market is poised for a huge uptick in the coming years, as well as resilient regional tank terminal storage rates exceeding SGD6 per m3.  

“On the other hand, we believe that demand will remain tepid in the near term for petrochemicals and crude tankers," it added.