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Company Reports

13 August 2024

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Oil Weekly: Brent USD 79.7/bbl (-0.8% WoW Average)

Recent Catalysts Driving the Price

  • Between 5-9 August 2024, Brent prices fell 0.8% WoW (from USD 79.1/bbl), WTI prices dropped 1.0% WoW (from USD 75.7/bbl), while Henry Hub gas spot price rose 3.3% WoW (from USD 2.0/MMBtu). The declines in oil prices were primarily due to disappointing nonfarm payroll data, which caused 3.5% DoD drop on 2 August, bringing oil prices below USD 75/bbl. However, oil prices managed to recover, rising 4.9% for the week.
  • Three Federal Reserve policymakers indicated on Thursday that they were more confident inflation had cooled down enough to support rate cuts. In addition, Libya's National Oil Corp declared force majeure at its Sharara oil field on Wednesday, adding that it had gradually reduced the field's output because of protests. However, U.S. oil rigs, an indicator of future production, rose to 485 this week. As a result, money managers cut their net long U.S. crude futures and options positions in the week.
  • While we maintain average oil forecast at USD 84.5/bbl (avg YTD: USD 83.5/bbl), easing geopolitical tensions may pose downside risks to SSI’s full-year price estimate. However, we expect some price support stemming from extended supply cuts. At this stage, we retain MEDC as our top pick, with target price of IDR 2,200 (+66% potential upside), reflecting FY24F valuation of 4.9x EV/EBITDA.

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