The performance of oil and gas issuers will get hotter after world crude oil prices continue to break new records, driven by OPEC's decision to cut production by 1.2 million barrels per day. The performance of oil and gas issuers until the third quarter of 2016 was still under pressure.
Positive performance can only be achieved by PT Medco Energi Internasional Tbk. (MEDC), of the seven oil and gas issuers listed on the Indonesia Stock Exchange. A mining stock analyst from PT Recaptal Securities Kiswoyo Adi Joe assesses the blessing of crude oil prices can be achieved by issuers as early 2017. The skyrocketing crude oil price still needs further scrutiny to project the performance of issuers in Indonesia.
The Brent oil contract traded at US$54.46 per barrel at the close in London, up 1% from its previous close. Throughout last week, Brent posted its most drastic gain since January 2009 with a 13% increase.
Drastic strengthening also occurred in New York. The WTI contract traded 1.2% higher to its highest since July 2015 at US$51.68 per barrel. On the other hand, the price of Indonesian crude oil in November fell by US$ 3.39 per barrel from US$ 47.55 in October to US$ 43.25.
Kiswoyo assessed that the trend of strengthening world crude oil prices would depend on demand. Winter in Europe and other countries are projected to increase demand. If the increase in oil prices persists, it will have a positive impact on the performance of issuers because the sale of oil is not carried out on a contract basis like coal.
The upward trend will be confirmed when winter is over, but demand is still high. He assesses that oil and gas issuers will succeed if prices stay above US$ 80 per barrel for more than three months. The average cost of producing oil by issuers in Indonesia reaches US$20-US$35 per barrel.
Senior Market & Technical Analyst at PT Daewoo Securities Indonesia Heldy Arifien assessed that oil and gas companies will still be the choice of market players until the end of this year. The oil and gas sector is projected to remain the prima donna of investors, especially in window dressing.
“We have a projected oil resistance of US$ 58 per barrel to US$60 per barrel. Until the end of the year, the average was US$ 48 per barrel. The oil price euphoria was used by investors for window dressing at least until the first quarter of 2017. Mining sector shares as of Thursday (Dec 1) shot up 73.76% throughout the year, far behind other sectors and the Jakarta Composite Index (JCI) which rose 13,19% (year-to-date).
Bisnis Indonesia, Page-1, Tuesday, Dec 6,2016
