Petronas shares drop nearly 3% with WTI price in decline again
The Malaysian oil and gas giant saw share price drop to RM15.05 within the first 90 minutes of trading on Tuesday.
Malaysia oil and gas giant Petronas, listed on the FTSE Bursa Malaysia KLCI index, saw its share price sink nearly 3% in early trade on Tuesday 28 April 2020, amid a new round of falling oil prices.
WTI oil futures on a downward slide again
Oil futures prices are once again on the decline, with IG trading data showing that June 2020 WTI contracts fell under US$11 a barrel overnight.
On Monday 27 April, WTI futures reportedly plunged roughly 25% after the US$3.25 billion United States Oil Fund – the largest oil Exchange Traded Fund (ETF) in the US – said it would be selling all of its front-month crude holdings for June 2020 in the next four days.
Oil prices had recovered in the latter half of last week into the high teens, as traders closed out their May 2020 positions. Prior to that, West Texas Intermediate (WTI) crude oil index had plummeted as low as -US$40 per barrel earlier in the week, as oil producers were forced to pay traders to buy oil off of their hands due to a lack of shortage caused by the coronavirus-driven oil demand wipe-out.
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Petronas says projects will be delayed due to Covid-19 headwinds
For the RM30 billion Petronas, oil’s price rout last week had led to reports that the company was deactivating 14 oil rigs until oil prices rebound, which it quickly refuted.
The company quickly refuted those reports in a statement posted on 25 April 2020, saying that it ‘has not shut down any of its rigs, offshore Malaysia, other than those concluding their drilling campaigns or are under temporary suspensions due to the current Covid-19 pandemic’.
It clarified that as of the date of the press release, 18 rigs are in operation within Malaysia waters.
The group added in the same note that there had been a temporary suspension of projects at some worksites in the last one month due to the Movement Control Order (MCO) implemented by the Malaysian government.
‘Most of these projects have either resumed their work activities or will be resuming soon upon securing the necessary approval from the Government,’ it said.
Finally, Petronas also provided an update on its operations. The company said that while it is ‘striving to minimise the impact to its planned domestic CAPEX programme in the face of the current challenges’, it does expect that some projects will be ‘naturally delayed due to the prolonged lockdowns implemented globally and the MCO in Malaysia, and further disruptions anticipated to the global supply chain’.
Year-to-date, Petronas’ share price is down nearly 11%. In February, the group reported a full-year net profit of RM40.5 billion for the 2019 financial year, 27% lower than 2018's RM 55.3 billion.
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