High seasonal demand and tight supply will tend to boost coal prices and GRM YoY and QoQ in 4Q22. In contrast, crude prices look set to soften QoQ in 4Q22 amid easing market tightness. Nevertheless, the global economic slowdown and geopolitics are the key factors to watch, as they could adversely affect the global demand recovery. Hence, our NEUTRAL rating for the sector stands. BANPU and Refining stocks are our preferred picks.
Demand pickup expected for 4Q22
The prevailing high inflation has decelerated global economic growth in 3Q22. Moreover, the ongoing lockdowns in China tied to its zero-COVID 19 policy has been another factor squeezing the oil demand during the period. Global oil demand growth in 3Q22 looks set to expand QoQ at a slower pace than what was previously envisaged. Nevertheless, the global oil demand is projected to expand further QoQ in 4Q22, buoyed by improved global economic conditions.