Bursa Energy Index Falls Most As Oil Sinks Amid Dwindling Storage Room

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The FBM KLCI closed up 2.04 points or 0.15% at 1,372.20 today after erasing intraday losses as crude oil’s price drop fuelled uncertainty in world markets already laden with Covid-19 pandemic concerns.

Bursa Malaysia’s energy index, which tracks oil and gas companies’  shares, fell the most among the exchange’s indices on news oil prices slumped again today amid concern about dwindling capacity to store crude oil worldwide, heightened by fears that fuel demand may be slow to pick up once countries ease curbs imposed on business and social life to combat the Covid-19 pandemic.

It was reported that US West Texas Intermediate crude futures fell to as little as US$10.64 (RM46.44) a barrel today, and were off 12.8%, or US$1.64, at US$11.14 a barrel as of 0635 GMT after plunging 25% yesterday.

“Brent crude futures fell to a low of US$18.85 and were last down 4.3%, or 85 US cents, to US$19.14 a barrel. The benchmark slid 6.8% on Monday, and the contract for June delivery expires on April 30,” Reuters reported.

CGS-CIMB analysts wrote in a note today that the US Energy Information Administration had estimated the capacity of the Cushing oil storage hub to be 76 million barrels. However, US crude oil inventories have increased over the past four weeks, by about 16 million barrels per week, and by April 17, approximately 60 million of the 76 million barrel storage capacity had been filled, with some of the remaining storage already leased or committed.

The CGS-CIMB analysts said the situation left even less space for contract holders with no existing arrangement for storage.

“So, the storage problem is expected to persist until production is further reduced,” they said.

Across Bursa at 5pm today, 5.02 billion shares had been traded for RM2.49 billion. There were 305 gainers and 548 decliners across the exchange.

The KLCI ended up at 1,372.20 after falling to its intraday low at 1,367.44.

Bursa’s energy index closed down 17.42 points or  2.63% at 646.01 as oil and gas-related firms ended among the bourse’s most-active stocks.

The list included Velesto Energy Bhd and Sapura Energy Bhd.

Sapura Energy, which registered a volume of some 86 million shares, ended down half a sen or 5.88% at eight sen.


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