TA Securities: Velesto, Pantech, MHB well positioned to leverage expenditure into O&G upstream activities

TheEdge Tue, Sep 19, 2023 09:03am - 5 months View Original

KUALA LUMPUR (Sept 19): TA Securities Research has upgraded its rating on the oil and gas (O&G) sector to “overweight” and said it is bullish on oil price due to floor on oil price supported by voluntary supply cut, resilient demand outlook that outstrips supply, and strategic petroleum reserves inventory restocking.

In a sector update on Tuesday, the research house said upstream service providers such as Velesto Energy Bhd, Pantech Group Holdings Bhd and Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) are well positioned to leverage the higher capital expenditure into upstream exploration and production activities.

TA Securities raised its 2023 oil price forecast to US$83.50 (RM391.61) per barrel (/bbl) and introduced 2024 oil price forecast at US$85/bbl.

“The global demand outlook is expected to remain resilient. USA has started refilling its strategic petroleum reserves (SPR) in June 2023, but the inventories remain low following the massive drawdowns previously.

“USA’s strong economy data provides hope for a soft landing. Meanwhile, China’s demand remains weak but is expected to pick up with the recent reserve requirement ratio cut to stimulate the economy and refiners increasing imports to capitalise on the strengthening export margins and higher export quotas,” it said.

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