Petronas counters, SapuraKencana up after OPEC signals production cut

Petronas counters, SapuraKencana up after OPEC signals production cut
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KUALA LUMPUR (Feb 15): Petronas Gas Bhd and Petronas Dagangan Bhd were among Bursa Malaysia top gainers after the Organization of the Petroleum Exporting Countries (OPEC) signalled production cut, which sparked hopes for oil prices.

Reuters reported that crude oil prices jumped some 12% at the end of last week that came amid renewed talk that OPEC might finally agree to cut production to reduce the world glut.

However, oil prices remained volatile today. Brent crude oil prices fell 1.32% to US$32.92 per barrel.

But today's oil price drop has not dampened sentiment on oil and gas (O&G) shares. At 11am, Petronas Gas rose 50 sen or 2.2% to RM22.74 while Petronas Dagangan pared gains at RM25.08.

Earlier, Petronas Gas reached its highest so far today at RM22.90 while Petronas Dagangan touched RM25.60.

SapuraKencana Petroleum Bhd gained two sen or 1.1% at 11:05am to RM1.82.

SapuraKencana had earlier traded at its highest so far today at RM1.86.

Despite the O&G share rise today, analysts were still mindful on the sustainability of such gains.

UOB Kayhian senior analyst Kong Ho Meng remains pessimistic about the O&G industry. For Kong, as long as oil prices stay between US$20 and US$40 per barrel, industry players will continue to hold back capital expenditure.

"Sentiment wise, talks of cutting output will continue, but I think it's still a weak indicator. I think oil prices will remain low in near term," he told theedgemarkets.com.

"If the oil price rebound cannot be sustained, the recovery of the industry will remain weak," he said.