Is It Time to Profit-Taking Oil Stocks?

When the energy stocks have risen this much, is this a good opportunity to profit-taking oil stocks after a surge in oil prices?

Amid negativity in the regional stock markets on Friday, the energy sector buoyed SET Index to close at 1,544.11 points, representing an increase of 10 points or 0.65% with a trading value of 104 billion baht.

 

The surge in the sector came after OPEC and its allies agreed to extend the output cut into April, except that Russia and Kazakhstan will be allowed to increase production by 130,000 and 20,000 barrels per day.

The extension raised positive sentiment in the oil-trading market, erasing concerns of oversupply in the market until the next meeting on March 31, 2021. On Friday, Brent rose above $68 a barrel, while WTI was slightly above $65 a barrel.

 

The energy sector in the Stock Exchange of Thailand (SET) reflected positively over the report of maintaining production cut and buoyed that Thai stock market by 2.3 points, while the banking sector that edged higher in accordance with economic recovery buoyed SET Index by 4.1 points.

 

PTT Public Company Limited (PTT) closed at ฿40.50/share, increased ฿0.50/share or 1.25% with a trading value of 3,685 million baht.

PTT Exploration and Production Public Company Limited (PTTEP) closed at ฿116.00/share, increased ฿2.50/share or 2.20% with a trading value of 3,502 million baht.

PTT Oil and Retail Business Public Company Limited (OR) closed at ฿30.25/share, increased ฿0.50/share or 1.68% with a trading value of 5,571 million baht.

PTG Energy Public Company Limited (PTG) closed flat at ฿21.00/share with a trading value of 815 million baht.

SUSCO Public Company Limited (SUSCO) closed at ฿2.98/share, increased ฿0.04/share or 1.36% with a trading value of 7.1 million baht.

 

Meanwhile, Kasikornbank Public Company Limited (KBANK) closed at ฿149.50/share, increased ฿5.00/share or 3.46% with a trading value of 5,052 million baht.

The Siam Commercial Bank Public Company Limited (SCB) closed at ฿111.50/share, increased ฿3.00/share or 2.76% with a trading value of 2,317 million baht.

Bangkok Bank Public Company Limited (BBL) closed at ฿126.50/share, increased ฿2.00/share or 1.61% with a trading value of 2,068 million baht.

Bank of Ayudhya Public Company Limited (BAY) closed at ฿35.75/share, increased ฿2.00/share or 5.93% with a trading value of 348 million baht.

TMB Bank Public Company Limited (TMB) closed at ฿1.17/share, increased ฿0.02/share or 1.74% with a trading value of 1,108 million baht.

 

During the trading session on Friday, the stock market made a successful attempt to break the resistance level in the morning session, but without a solid positive catalyst to drive the market, profit-taking from retail investors has erased SET’s gain to close 10 points higher at 1,544.11 points.

This sudden surge might be a good opportunity to sell the rips after the index was unable to hold its ground above the resistance level at 1,500 points and without a positive driver, profit-taking could follow soon after this surge attempt.

 

More importantly, Bloomberg Commodity Forecast indicated that Brent Crude in 1Q21 would average around $63.17 a barrel, while the average for the whole year and the next year is $63.64 a barrel and $59.75 a barrel. The forecast was based on an anticipation of economic recovery from the coronavirus pandemic, which would boost oil demand in the market. When demand increases, oil producers would undoubtedly hike their production as well, especially Russia, which has been eagerly waiting for this chance, seeing from the action in the OPEC+ meeting that resulted in an increase production by 130,000 barrels per day.

 

When the energy stocks have gained this much, this might be the point where a good number of investors will decide to take the profit as the current prices were not that far from the target prices.

 

Bloomberg Consensus gave target prices as follows;

Oil Stocks

 

Banking Stocks