Malaysia Petronas says oil industry to stay volatile

The oil industry will stay volatile even after a price rally towards $70 a barrel, as it is still unclear if the rise is due to the broader economy or a new speculative play, the chief of Malaysia’s state oil and gas company said on Monday.

Mohd Hassan Marican said the industry is undergoing a further wave of consolidation, as cash-strapped small- to medium-sized firms sell off assets due to lower margins, and that selected international and state-run oil companies will gain from this.
“It is still uncertain whether the increase is due to the ‘green shoots’ of economic recovery or due to a new speculative play in the commodities and the weakening of the U.S. dollar,” Petronas President and Chief Executive Officer Hassan told the annual Asia Oil and Gas Conference.

“Despite the fragile sense of stability emerging in the market, I believe that we can expect continued volatility in the industry for some time to come, reflecting the ongoing developments in the broader economy.”

U.S. oil prices jumped to a seven-month of $70.32 on Friday, before easing below $68 on Monday as the U.S. dollar continued to strengthen from its recent weakness.

Guardian