Written by OSK Research
Wednesday, 07 April 2010 08:42
KUALA LUMPUR: OSK Research is reiterating its Overweight on the oil and gas sector as it believes new O&G contracts awards should gradually come in towards 2H10.
It said on Wednesday, April 7 the industry is due for a rerating soon. Its top picks include Alam Maritim, Kencana Petroleum and Wah Seong Corp.
OSK Research said on Tuesday, prices of nearly 2/3 of the listed O&G stocks moved up on positive sentiment as crude oil price successfully broke through the USD80/barrel resistance.
“We are of the view that as long as the price hike is gradual, which we think is the case rather than a sudden spurt, there would be more certainty of oil majors feeling confident enough to start awarding new O&G contracts,” it said.
OSK Research also noted that this round of price rise - after oil price consolidated for over half a year at US$70-US$80 a barrel – was not exactly influenced by the weakening US dollar against a basket of major currencies since the two have been moving in the same direction lately.
“As such, we re-iterate our Overweight call on the O&G sector,” it said.
It added that crude oil price broke above the US$80/barrel resistance convincingly. This happened after prices consolidated for about half a year at the US$70 to US$80/barrel range.
“We believe the aggressive buying on O&G counters was in anticipation of a string of new O&G contracts due to be awarded by Petronas and its PSC contractors, especially since the O&G industry has been quiet for more than a year,” it said.
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