Oil stocks expected to remain positive as prices remain high in 2022

VIETNAM, December 28 – PV Drilling I, a floating offshore drilling rig, from PetroVietnam Drilling & Well Services Corporation. – Photo pvdrilling.com.vn

HÀ NỘI – While the average oil price is unlikely to reach US $ 100 per barrel in 2022, it could exceed the operating break-even point in Việt Nam of around $ 60 per barrel. This will be the engine of oil inventory growth next year, experts said.

The country’s stock market faced another sharp correction on December 25, with the VN Index losing nearly 21 points. The scale of the market was negative as up to 706 stocks fell, which is equivalent to nearly two-thirds of the stocks on all three exchanges.

Despite the downtrend in the market in general, oil stocks still posted a positive session with a series of stocks showing strong gains.

Of which, PetroVietnam Drilling & Well Services Corporation (PVD) led the rally after reaching the maximum daily gain of 7%. The company’s shares continued their bullish trend on Friday, up 1.75% as of 1:53 p.m. local time.

Even though PVD fell 11% from its five-year peak on November 16, it still jumped more than 76% from the start of the year.

Trading on a wide range of Hà Nội (HNX) stock exchanges, PetroVietNam Chemical And Services JSC (PVC) closed Thursday’s session at an all-time high of 16,000 VNĐ per share, up 8.8%. During the session, the PVC even increased by 9.5%. He extended his gains on the last trading session of the week, up 5%.

Bình Sơn Refining and Petrochemical Company Limited (BRS), PetroVietnam Technical Services Corporation (PVS), PetroVietnam Oil Corporation (OIL) and PetroViet Nam Coating JSC (PVB) also performed exceptionally, up over 3%.

There will likely be corrective pressure at the end of the year and investors are expected to restructure towards certain core stocks that are expected to have positive trading results, such as oil and gas, fertilizers, power, insurance and pharmaceuticals, said Đỗ Trung Thành, director of business analysis at Analyst at Petro Capital Securities.

For oil and gas stocks, Thành said a growth driver is forecasting a price hike in 2022.

Goldman Sachs predicts that the price of oil is expected to hit $ 100 a barrel next year, as demand for oil was already at record levels before the latest Omicron variant outbreak.

Petroleum Securities expert said that the average price of oil is unlikely to reach US $ 100 per barrel in 2022, it could exceed the breakeven point of operating in Việt Nam, which is around 60 $ a barrel, boosted by both supply and demand sides.

Thành expects the activities of upstream companies and intermediaries in the industry to be promising, while exploration and production activities resume.

Whose companies providing services of drilling, offshore engineering, floating production and offloading storage (FSO / FPSO), transportation of oil and gas products will get new jobs with higher service prices, improving to the both the income and profits of these companies, then reflected positively in stock prices.

Likewise, in its Outlook 2020 report, VNDIRECT Securities Corporation said that the possibility of reaching $ 75 a barrel in 2022 of Brent oil will be the driving force for the oil and gas industry as global demand is on the move. to return to pre-pandemic levels and supply appears to remain tight due to OPEC’s cautiousness in increasing production and the slow recovery of the US oil industry.

In the upstream group, VNDIRECT estimates that exploration and production (E&P) activities in Southeast Asia will also be stimulated by the sharp rise in oil prices, which will help revive the drilling market in the region to medium term and will bring benefits to drilling service providers. like PVD.

Meanwhile, the exploitation of natural gas will be a beacon of hope in Việt Nam thanks to huge projects in the coming years. It will be a major growth force for oil and gas value chain companies in the country in the long run, strengthening industry fundamentals and providing opportunities for entrepreneurs and domestic upstream service providers such as PVS and PVD.

In the middle group, VNDIRECT realizes the great potential of the LNG sector through the stability of the power generation process and the ability to increase capacity through imports.

The downstream group should benefit from the recovery in demand in the “new normal”. VNDIRECT expects these changes to help oil distributors such as Petrolimex (PLX) and OIL reduce the negative impact of lower inventory prices. – VNS

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Felix J. Dixon