Oil & Gas sector | Neutral

OCBC Investment Research, Aug 23

OPEC (Organization of the Petroleum Exporting Countries) members are meeting major exporting non-Opec countries at the International Energy Forum in Algeria from Sep 26-28 to discuss the oil market situation, including any possible action that may be required to stabilise the market. At present, while many market watchers are expecting a low possibility of curtailed output by Opec, we expect market speculation to continue till the end of September. We believe that this would deter short-selling in oil, offering some support for oil prices in the meantime around the US$40+ range and alleviating downward pressure on oil and gas stocks especially after the Swiber incident. Still, the overall operating environment for companies in the sector remains tough.