Energy

Energy 

 

-Crude oil prices making year's new highs 

 

Crude oil prices have made year's high in the recent two weeks since crude oil production from the US has decreased from 9.4 million barrels/day at end-March to 9.1 million barrels/day in April. The IEA also revised up crude oil demand in 2015 by 0.09 million barrels/day to 93.6 million barrels/day, thus relieving the oversupply problem. Oil supply has also been weakened for the short term by the conflict in the Middle East, thus boosting the oil price. 

 

- Oil price assumption: US$5/barrel cut in 2015, US$5/barrel up in 2016 

 

We cut our Dubai crude oil price assumption from US$75/barrel to US$70/barrel in 2015 to reflect YTD average crude oil price of US$53.46/barrel; average oil price is projected around US$65/barrel in 2Q15, and then rise to US$75-80/barrel in 2H15 as well as 2016. We revise up our Dubai crude oil price assumption from US$75/barrel to US$80/barrel since non-OPEC oil production (especially the US) would drop and demand would rise owing to the economic recovery from 2H15 on. Under the new revision, new FY2015-2016 earnings forecasts and fair value are shown in page 3. 

 

- PTT, PTTEP's fair values revised up by 4.5%, 1.1% 

 

We reiterate NEUTRAL. Under the new assumption, FY2015 fair values of PTT and PTTEP are B402.5 and B140, respectively. We reiterate BUY for both since the share prices have already plunged far below the fair value.