The price rout is ending, analysts say.
Oil and gas stocks in Singapore have been hammered by the commodity price rout, but analysts at RHB say that it may be high time to reconsider snapping up these cheap shares as oil prices are expected to recover soon.
“The oil & gas sector has been massively oversold. The oil price has since rebounded from a low of USD27.88/barrel (bbl) for Brent crude oil to the USD37/bbl range today. We believe that a bottom has been found,” RHB said in a report.
The report added that supply growth will be kept in check by major producers’ decision to roll out production freezes.
Meanwhile, demand growth is still positive at about 1.2% per year, though somewhat slower than the 1.7% seen in 2015.
“Overall, the physical oil market should return to a balanced market by 1Q17. Oil prices would move ahead of the physicals market. We expect oil prices to rebound towards the USD50/bbl range by 4Q16, lending further momentum to the sector recovery which we are already witnessing,” RHB said.
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