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Published on March 13, 2008

Citigroup Global Markets has set a target price for Thai Oil at Bt94.

Goldman Sachs Global Investment expects Thai Oil to reach Bt104 within a 12-month period, or an almost 30-per-cent gain from yesterday's close of Bt73.

Thai Oil is among the top companies recently highlighted by Goldman Sachs, along with Frontier Oil, Cabot Oil and Gas, and Pride International in the Americas; ENI, Repsol, and Aker Kvaerner in Europe; Gazprom in Russia; and Cairn India and Cnooc.

As oil demand remains strong with its price surging beyond US$108 (Bt3,400) a barrel, Thai Oil is expected to record inventory gains in the first quarter, Citigroup said.

Strong demand in Asia and the Middle East will also shield Thai Oil from negative impacts from the start-up of Russian refinery Reliance Petroleum, it said.

Reliance plans to start the first of its two distillation units (290,000 barrels per day) in the third quarter and the other half in the fourth quarter.

The new supply is considered small compared with demand growth in Asia of about 700,000 barrels a day.

Credit Suisse recently revised upwards its earnings forecast for PTTEP 5-10 per cent, with its target price increasing from Bt180 to Bt190.

"Higher oil price gains will be offset by a stronger baht and its corresponding cost adjustments. We expect an earnings growth of 35 per cent and 19 per cent over the next two years, due to a 23-per-cent volume increase this year and a 17-per-cent rise in gas prices," Credit Suisse said.

PTTEP's outstanding performance will also benefit its parent company, PTT.

The brokerage house revised PTT's earnings growth upward by 3-6 per cent, with a target price increase from Bt340 to Bt352, due mostly to PTTEP's earnings.

Limiting PTT's gains are rising risks in populist policies, including the decision to cap liquefied petroleum gas and pressure to hold down prices at the pump.

PTTEP and PTT share prices ended yesterday at Bt160 and Bt338, respectively.

Oil futures yesterday ended at $108.64 in Singapore, as sellers quote higher prices to offset the weakening dollar which reduces their income in dollar term.

Goldman Sachs expects oil prices to average $95 a barrel this year and $105 to $110 in the following two years.

Its previous estimates were $80 to $90 for the next three years.

Oil prices could spike to $135 or $150 on major oil-supply disruption.

Against fears that prices staying above $100 a barrel for three to five years would lead to global economic disaster, CLSA said in its research that was unlikely to happen. Rather, it would profoundly change many facets of the world and opportunities for investment. In these circumstances, upstream oil companies would gain, it added.

The Nation