PublicInvest Research maintained an ‘overweight’ recommendation on the oil and gas sector with expectations that oil prices could soar to US $ 80 a barrel, driven by growing global oil demand and supply.
The firm said that over the past 12 months, oil prices have risen more than 70%, from around US $ 40 a barrel in mid-June last year to more than US $ 70 a barrel, boosted by optimism over the easing of COVID-19 restrictions for some of the world's largest economies. .
The research firm also opined that the quiet response by shale producers also led to price increases as well as aggressive production cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) which saw a faster decline in global oil inventories.
Based on the current sector dynamics, it expects the average oil price to be around US $ 70- $ 75 per barrel for this year.
“Looking at these prices, we believe it is quite attractive for major oil players to increase spending in line with the progressive global economic recovery and the reduction of COVID-19 cases.
"This is indeed positive for oil and gas service providers although the Movement Control Order (PKP) 3.0 may pose some short -term challenges in terms of project implementation," he explained as reported by Bernama.
The research firm also thinks demand for oil is improving with a recovery expected in 2022, especially when most long -haul flights that use more fuel resume operations.
