MIDF Research is anticipating oil and gas services and equipment companies to turn in improved performances in the first half of the year.
PETALING JAYA: MIDF Research believes the overall outlook for the oil and gas (O&G) sector this year remains encouraging on the back of higher capital expenditure (capex) by oil majors as well as stable and elevated crude oil prices.
However, the research house remained cautious on the possible escalation of geopolitical tensions, major Organisation of Petroleum Exporting Countries plus other oil-producing countries (Opec+) production changes and the US Federal Reserve’s monetary policy.
“We anticipated that Brent crude oil prices will continue to be relatively stable within the US$77 to US$84 per barrel range in August 2023 (year-to-date 2024: US$83.51 per barrel), elevated by the geopolitical tensions and Opec+ production cuts, but offset by lower demand from China,” it added.
MIDF Research is also anticipating oil and gas services and equipment (OGSE) companies to turn in improved performances in the first half of the year based on guidance from the second quarter of financial year 2024 (2Q24) earnings result of oil and gas players in the United States and Europe.
The research house is highly optimistic about the upstream sector, given that its contractual work basis gives its operations more stability despite a slip of Brent crude oil to a maximum threshold of 20% to 25% below current spot prices.
“We believe the upstream sector would remain resilient given the higher capex (global capex up by 24% year-on-year to US$600bil; Malaysian capex up by 23.3% y-o-y to RM31.2bil in 2024) and the Brent crude oil prices remaining relatively stable and elevated,” it added.
