Local energy shares free fall
published : 9 Mar 2020 at 13:13
Local energy shares nosedived by more than 20% following a historic collapse of oil prices amid the price war tension jumpstarted by Saudi Arabia, setting the tone for another week of bear market for Thailand's main equity benchmark.
Share price of PTT Exploration and Production Plc (PTTEP), the oil and gas drilling arm of national oil and gas conglomerate PTT Plc, fell nearly 30% from Friday's closing during the morning trading session on the back of a fractious meeting in Vienna between Opec member countries.
Similarly, share prices of PTT and PTT Global Chemical Plc plummeted sharply by more 24% as panic-selling was sparked by a plunge in crude oil prices.
Friday's meeting of the Organization of the Petroleum Exporting Countries (Opec) left a sour note as member countries failed to finalise a deal to continue restraining their output.
Russia refused to go along with Opec's efforts to rescue the coronavirus-battered oil market by cutting production, while Saudi Arabia escalated the situation further over the weekend, slashing selling prices by US$6 to $8 in a bid to retake market share and heap pressure on Russia, CNN reported.
The turmoil has sent brent crude price to plunge by 28% to $32 a barrel and on track for the worst day since 1991, according to Refinitiv.
"We think a global crude price war is likely to begin in order to pull Russia back to the negotiation table or fight back Saudi Arabia's lowest-cost producer," said Kaweewit Thawilwithayanon, analyst at KGI Securities.
PTTEP's earnings could tumble by as much as 38% this year pressured by lower demand during the Covid-19 outbreak, no deal of further supply cut from Opec and a looming price war among crude-producing countries, said Mr Kaweewit.
A sharp fall in energy share prices is not good news for the Stock Exchange of Thailand (SET) index as the majority of equity weighting on the bourse is made up of energy shares.
The SET index plummeted by 92.37 points or -6.77% to close the morning trading session at 1,272.20 points in turnover worth 56 billion baht.
Panic-selling and force-selling were seen through automatic trading programmes, said Therdsak Thaveeteeratham, senior executive vice-president at Asia Plus Securities.
"Opec's failure to reach an agreement adds pressure to the fragile market sentiment already hampered by the coronavirus outbreak and economic slowdown," said Mr Therdsak.