Home Capital Oil & Gas

China reopening will be 'key support' for oil in 2023: DBS

Felicia Tan
Felicia Tan2/6/2023 08:06 PM GMT+08  • 2 min read
China reopening will be 'key support' for oil in 2023: DBS
The analysts expect Brent crude oil prices to average between US$85 to US$90 per barrel in 2023. Photo: Bloomberg
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

DBS Group Research analysts Suvro Sarkar, Ho Pei Hwa, Duladeth Bik and William Simadiputra are estimating that prices for Brent crude oil will average between US$85 to US$90 ($112.48 to $119.10) per barrel in 2023.

This is lower than the average of US$99 per barrel in 2022, although still higher than the average prices seen between 2015 to 2021.

“Despite recession concerns, we do not expect oil prices to fall off the cliff, as the supply side continues to be tight, support from the release of strategic petroleum reserves (SPRs) tapers down, and the European Union (EU) ban on Russian oil and product imports comes into effect,” the analysts write in their Jan 31 report.

“China reopening trajectory will be the biggest positive going forward in 2023. Meanwhile, lower natural gas prices could help Europe dodge a recession and provide further support for oil prices,” they add.

Further to their report, the analysts remain positive on Chinese oil majors as value plays even though these companies mostly corrected by 10% to 20% from their recent highs on the back of profit taking and outflows amid recession fears.

“As China’s reopening gathers pace, we could continue to see some uplift from here following China’s reopening and a pick-up in broad investor sentiment for the Hong Kong/China market, though the upside could be more benign than in 2022,” the analysts write.

See also: Rex International's subsidiary gets approval for oil and gas exploration in Norway

“We maintain our ‘buy’ calls on China National Offshore Oil Corporation (CNOOC), PetroChina, and China Petroleum & Chem (Sinopec), which still offer 15%-25% upside to our revised target price and lucrative FY2023 dividend yield of 8%-11%,” they add.

The analysts have given CNOOC, PetroChina and Sinopec TPs of HK$13 ($2.19), RMB5 (97.6 cents) and RMB5.30 ($1.03) respectively.

Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.