KUALA LUMPUR: Oil prices should remain sideways in the first half of 2023 (H1’23) as both demand and supply dynamics are expected to be at parity over the next few months, said Hong Leong Investment Bank (HLIB).
The investment bank also lowered its Brent crude oil forecast to US$85-US$90 per barrel for next year from US$93-US$98.
“We also view that the petrochemical supercycle is now behind us as product spreads are seen to be coming off their respective peaks,” it said in a research note today..
HLIB said it is positive on Petroliam Nasional Bhd’s (Petronas) newly-released Petronas Activity Outlook 2023-2025 as key value chains such as the drilling rigs, offshore hook-up and commissioning, maintenance, construction and modification, as well as the offshore support vessels segments are expected to see improved activity levels in 2023.
“We believe 2023 will be a golden year for the oil and gas services and equipment sector, which was a laggard to the elevated oil price environment for the past year,” HLIB said, adding that it maintained its overweight call on the oil and gas sector.
HLIB expects global oil demand and supply to be at parity at 100 million-102 million barrels per day in H1’23 but could see upside risk with China’s highly likely reopening next year.
Meanwhile,the investment bank said it expects Petronas’ capital expenditure(capex) spending to be maintained at the RM40 billion-RM50 billion level annually between 2023 and 2025, with about 15% of its annual capex allocated to renewable energy initiatives.
“Petronas has pledged to a net-zero carbon emission goal by 2050, but believes that oil and gas would still form 50% of the world’s energy mix for the next 20 years to 30 years,” it added. – Bernama