Equity Analysis /

Thailand: Energy - 3Q22 playbook—Upstream E&P... a safer selection

  • Further demand improvement expected for 3Q22

  • Supply tightness to continue boosting oil prices in 3Q22

  • Demand growth amid tight supply to boost 3Q22 GRM YoY

Suppata Srisuk
Suppata Srisuk

Equity Research Analyst

Bualuang Securities
24 June 2022

Improving demand in the face of supply tightness will tend to boost crude and coal prices and GRM further YoY in 3Q22. Nevertheless, the global economic slowdown may adversely affect the global demand recovery. Also, concerns over the government intervention may put downward pressure on Thai refining stocks and PTT until the dust settles. Hence, our NEUTRAL rating for the sector stands. PTTEP is our preferred pick.

Further demand improvement expected for 3Q22

The global crude demand looks set to expand further through 3Q22, boosted by the reopening of economies worldwide. However, the global economic slowdown may derail the global oil demand recovery—there is a strong positive correlation between global economic growth and oil demand growth. The Russia-Ukraine war remains a key factor to watch—the longer the war drags on, the higher the risk of slower global oil demand growth.