Rising WTI Crude Prices Benefit Energy Stocks, Thai Stock Market Faces Short-Term Concerns

Oil Prices Surge as WTI Hits New Record

In a remarkable rally, West Texas Intermediate (WTI) crude futures have continued their upward trajectory, surging over 26% since July. Yesterday, WTI rose by 0.5% to reach an impressive $86 per barrel, setting a new year-high record. These soaring oil prices are expected to greatly benefit energy stocks.

Thailand’s Stock Market Struggles Amid Energy Concerns

However, contrary to this positive trend, Thailand’s stock market index has experienced a decline due to issues in the energy sector. Stocks of Thai Oil Public Company Limited (TOP) have plummeted, primarily due to concerns surrounding oil pipes and uncertainties regarding the new government’s approach to reducing diesel and electricity prices.

To address these concerns, securities analyst Asia Plus Securities Co, Ltd emphasizes that Thailand’s stock market fluctuations should be viewed as a short-term concern. They further advise investors to perceive it as an opportunity to gradually accumulate more stocks in their portfolios.

Fuel for Thought: Oil Prices Continue to Rise

Today’s noteworthy topic revolves around the continued surge in oil prices. West Texas Intermediate (WTI) has reached an impressive $90 per barrel. This rise can be attributed to OPEC+’s potential production cuts until the end of 2023 and the Chinese economy’s promising signs of recovery. Consequently, shares of PTT Exploration and Production Public Company Limited (PTTEP) are anticipated to perform favorably in this scenario.

While the price of WTI crude oil exhibits momentum and is projected to fluctuate between $85 and $100, various factors contribute to its sustained growth. These factors include the possibility of the US Federal Reserve maintaining interest rates at 5.50% and the potential interest rate cuts expected from early 2024. Additionally, positive growth forecasts for China and the likelihood of OPEC+ extending their production cuts further reinforce this bullish outlook.

Challenges in the Thai Stock Market

Conversely, the direction of stock prices in Thailand is largely influenced by oil prices and government initiatives to reduce energy costs. The recent interview with Mr. Peeraphan Saliratwiphak, Deputy Prime Minister and Minister of Energy, further adds to the fluctuation in oil and electricity prices.

Nevertheless, the Research Department suggests that global crude oil prices have the potential to remain at high levels, driven by the aforementioned factors. Thailand’s crude oil prices, however, require clearer signals from the Minister of Energy due to various complicating factors impeding the reduction of oil and electricity prices. Hence, short-term investment strategies should focus on energy stocks that prosper amidst the upward trajectory of global crude oil prices, including PTT, PTTEP, TOP, SPRC, among others. Investors are advised to gradually purchase these stocks during price dips.

Positive Outlook for the Thai Stock Market

In line with the above analysis, Kasikorn Securities Public Company Limited anticipates a potential rise in the Thai stock market. Money flow dynamics changing to favor energy stocks, along with the market’s speculation of Saudi Arabia extending crude oil production cuts beyond next month, contribute to this positive projection.

Encouraged by this prediction, we recommend investing in shares of PTT Exploration and Production Public Company Limited (PTTEP), with a target price of 168.00 baht. This comes on the heels of WTI crude oil prices reaching their highest level since November 2022.

Refinery Stocks Face Continuing Challenges

Despite the overall positive sentiments towards the energy sector, analysts at Krungsri Securities Public Company Limited caution that refinery stocks continue to face a negative outlook. This stems from the recent proposal by the new energy minister to import refined oil, shifting their focus away from conducting oil businesses and towards ensuring national energy security.

Additionally, Krungsri Securities holds a negative view on the refinery group due to the expected increase in supply resulting from this policy shift. As a result, alternative measures, such as reducing retail prices or importing pure oil freely, may further impact the refinery group’s performance.

West Texas Intermediate (WTI) crude futures continued to rise. It has risen more than 26% since July, while yesterday it continued to rise 0.5% to $86, marking a new record for the year. and should benefit energy stocks

Since yesterday, Thailand’s stock market index fell from the weight of stocks in the energy group that has problems Thai Oil Public Company Limited oil pipes or TOP stocks dropped, along with concerns about the new government’s approach to reducing diesel prices and electricity prices.

securities analyst Asia Plus Securities Co, Ltd commented on that analysis The above-mentioned issues are weighing on Thailand’s stock market index It is a short-term concern. And it should be seen as an opportunity to gradually accumulate more stocks into the portfolio. about today’s interesting topics Let’s start with oil prices that continue to rise, with WTI reaching $ 90 / barrel. This is due to the stimulus that OPEC + may cut production until the end of 2023 and the Chinese economy which is starting to show signs of recovery. This situation should bode well for shares of PTT Exploration and Production Public Company Limited or PTTEP.

However, the price of WTI crude oil has momentum to continue in the range of $ 85-100, both see the CALL OPTION contract, WTI crude oil has the highest volume since May 2023 at 1.3 hundred thousand contracts and is still receiving supporting factors. are 3 main reasons: 1. ) The US Federal Reserve (Fed) has the opportunity to keep interest rates at 5.50% and is likely to cut interest rates from the beginning of 2024 2.) Expect future growth in China and 3 .) OPEC+ may extend the period of further production cuts

while stocks are based on oil prices in Thailand Prices could move much less, under pressure from government measures to reduce energy costs. and most recently, Mr Peeraphan Saliratwiphak, the Deputy Prime Minister and Minister of Energy Give an interview about ways to reduce Energy prices on September 4, 2023 that the main story What needs to be accelerated is the price of oil and electricity prices.

However, the Research Department estimates that global crude oil prices have the opportunity to remain at a high level. according to the factors mentioned above While crude oil prices in Thailand have to wait for clearer signals from the Minister of Energy. As there are many factors that can make it difficult to lower oil and electricity prices, therefore, short-term investment strategies Also focus on investing in energy stocks that benefit From the upward direction of global crude oil, such as PTT, PTTEP, TOP, SPRC, etc., gradually buy when the price falls.

While Kasikorn Securities Public Company Limited said in the analysis in the same direction The Thai stock market has an opportunity to rise in a range by the money flow spinning to change groups to play Believes that energy stocks will benefit from a positive From the direction of the rise in oil prices As the price of WTI crude rose by around 2% overnight, the market speculated that Saudi Arabia may extend crude oil production cuts not only until the end of next month but may continue to expand until the end of this year

We also recommend buying shares of PTT Exploration and Production Public Company Limited (PTTEP) with a target price of 168.00 baht after WTI crude oil prices rise to the highest level since November 2022.

Analysis Krungsri Securities Public Company Limited said the negative outlook for refinery stocks has not ended yet. after the new energy minister proposed to import refined oil By stating the mission of the government and the Ministry of Energy, not to do oil business but to create energy security for the country

Therefore, the next method, apart from reducing the retail price It can offer to import pure oil freely In order to reduce prices more, but this method, Krungsri Securities has a negative opinion on the refinery group due to an increase in the supply.

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