Research & Stock Picks

Company Reports

19 August 2024

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Oil Weekly: Brent USD 79.7/bbl (+3.5% WoW Average)

Recent Catalysts Driving the Price

  • Between 12-16 August 2024, Brent prices were up +3.5% WoW (from USD 77.9/bbl), WTI prices increased +4.2% WoW (from USD 74.8/bbl), and Henry Hub gas spot price rose +5.2% WoW (from USD 2.0/MMBtu) on better-than-expected U.S. economic reports. Notably, retail sales for July rose 1%, surpassing the anticipated 0.3% increase, following 0.2% dip in June. Additionally, weekly jobless claims dropped by 7,000 for the week ending August 9, signalling stronger economy.
  • However, oil prices remain under pressure from bearish factors, including weaker Chinese oil demand and recent global demand revisions from OPEC and the International Energy Agency. In the Middle East, the risk of conflict escalation remains high as Israel continues its operations in Gaza, exacerbated by Hamas' boycott of ceasefire negotiations.
  • 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 (+65% potential upside), reflecting FY24F valuation of 4.9x EV/EBITDA.

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