KUALA LUMPUR: The elevated oil price environment is expected to stay for the medium term amid the severely underinvested phase, coupled with a record high demand for oil for this year and next year.
Maybank Investment Bank (Maybank IB) sees a robust and an appealing outlook for oil & gas, services and equipment (OGSE) players involved in global floating production storage and offloading (FPSO), regional Asean drilling rig and local offshore support vessels.
"We see a severely tight supply in these sub-segments as there have been zero to minimal newbuilds, considering high barriers to entry into these businesses and high capex involvements should one decide to purchase/invest into newbuilds at current juncture," the firm said.
It noted that the US Energy Information Administration (EIA) expected a net deficit in the fourth quarter of 2023 (Q4 2023) with world consumption slightly eclipsing production by 0.2mbpd.
EIA forecasted the supply and demand gap to be narrow at 0.2mbpd and 0.5mbpd in 2023 and 2024 respectively.
"Meanwhile, the Organization of the Petroleum Exporting Countries + (OPEC+) has engaged in multiple rounds of production cuts over the past two years. We expect further output cuts from OPEC+ if oil prices do not hold above US$75 per barrel."
Maybank IB maintained its 'positive' view on the sector with in-house Brent ASP assumptions of US$85 and US$80 per barrel for 2023 and 2024 respectively.
The research firm's top sector BUYs are Yinson Holdings Bhd, Bumi Armada Bhd and Wasco Bhd.