Analysts have negative outlook on refining stocks amid oil price volatility

Oil prices plunged more than 10% last night amid growing recession fears that could trigger an economic slowdown, which would cut demand for petroleum products.

Brent crude lost US$10.73 or 9.45% on Tuesday to US$102.77 per barrel. The West Texas Intermediate (WTI) dropped US$8.93 or 8.24% a barrel to US$99.50.

However, oil prices began to rise modestly on Wednesday morning. Brent increased 1.17% to US$103.97 per barrel and WTI gained 0.70% to US$100.20.


KTBST Securities is bearish on oil prices after international benchmark Brent crude fell 9.5% to US$102.8 a barrel last night as recession fears deepened, raising concerns that a slowing economy will reduce demand for petroleum goods. Moreover, it was reported that China is planning to undertake new rounds of mass Covid-19 testing in the city of Xi’an over the period of seven7 days. Meanwhile, Saudi Arabia decided to raise crude prices to Asia in August to near record highs, with Arab Light rising as high as US$9.3 per barrel and Arab Extra Light reaching US$10.7 per barrel.

KTBST expects that oil prices will remain elevated in the second half of the year due to tight supply amid escalated Russia’s war in Ukraine and energy reserves falling below the long-term average.

KTBST maintains a “Neutral” rating on the energy sector and favors upstream equities. PTTEP (TP: THB190.00) and BANPU (TP: THB16.00) are Top Picks with a “BUY” rating.