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Hot Stocks: Keppel, Ezra shares surge as oil holds above US$50

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SHARES of Keppel Corporation surged on Wednesday with oil prices holding above US$50 per barrel. The stock rose steadily through the day, and was up 26 Singapore cents, or 4.8 per cent, to S$5.72 at 4.15pm.

Other oil and gas (O&G) stocks were in active play, including Ezra Holdings, Vallianz Holdings and Vard Holdings. They were among the top 20 most heavily traded stocks. Ezra was the most active traded, gaining 1.7 Singapore cents at 8.9 Singapore cents. Some 363 million shares changed hands.

Oil prices breached US$50 - its highest since July - boosting hopes of a rebound in offshore exploration and production (E&P) activity levels especially in deeper waters.

Still, reports show the consensus among O&G companies is that US$60 oil is the ideal level where companies look to increase their capital spending, The Business Times reported this week.

Oil and gas companies are expected to prioritise offshore over onshore E&P, according to a June report from UOB Kay Hian.

"A recovery in offshore activity might be gradual rather than sharp, and is likely to lag an oil price recovery," the brokerage said.

Maybank Kim Eng reiterated its call to investors to disconnect O&M stock valuations from oil prices, as "there are no visible signs that the recent oil bounce will filter through to earnings opportunities".

"We suspect asset impairments are not all done, and could persistently upset share prices in the next few quarters," the brokerage said.