Oil continues to surge and gas prices show signs of recovery, Business Advantage PNG’s monthly review of Papua New Guinea commodity and financial markets.

Twinza Oil jack-up rig Credit: Twinza Oil

According to Kina Securities, the oil price has maintained its rise. West Texas Intermediate rose 10 per cent over the month, and is up 43.6 per cent over the year.

There may be more price rises in the offing. According to a report in The Sydney Morning Herald, US sanctions against Iran and Venezuela are reducing spare capacity in the global oil markets to ‘wafer-thin levels very fast’.

‘If anything goes wrong in the geopolitical cauldron of world energy over the next six months, we will discover whether Saudi Arabia really is capable of cranking up an extra two million barrels a day of crude,’ the SMH report says.

‘The legendary Ghawar field (in Saudi Arabia) is badly depleted. It cannot pump more than 3.8 million barrels a day.

‘This is a first-order shock. The company (Aramco) has always asserted with magisterial confidence that it can produce five million barrels a day without difficulty.’

Oil analysts Westbeck Capital are predicting a global supply deficit of 1.3 million barrels a day by the third quarter of this year even if OPEC matches all the lost oil from Iran sanctions.

Meanwhile, LNG prices are also recovering, according to Kina. LNG Japan/Korea is up 17.5 per cent for the month, although it is down 40 per cent over the year.

Metals

The five year crude oil price Credit: Infomine.com

Precious metals prices have moved sideways. Gold was down 1.2 per cent for the month and has risen 0.1 per cent over the year, according to Kina.

‘The cocoa price rose 1.6 per cent for the month.’

The silver price was down 0.1 per cent over the month, and is down 3.7 per cent for the year.

Copper came off slightly, but remains strong. It was down 0.2 per cent over the month, according to Kina, but has risen 9 per cent over the year.

Agriculture

Agriculture prices were stable. The palm oil price rose 1.8 per cent for the month, according to Kina, and is up 2.3 per cent for the year.

The cocoa price rose 1.6 per cent for the month but is up 5 per cent for the year.

‘Steamship Trading Company shares were up 12 per cent over the month.’

Coffee prices fell 2.6 per cent for the month and are down 9.6 per cent for the year.

Equities

The stock market rose. The KSI Home Index (PNG-listed stocks only) was up 1.2 per cent over the month, and is up 3.2 per cent over the year.

The KSI Index (which includes dual-listed stocks as well) went sideways. It rose 0.1 per cent in the month and is up 0.2 per cent over the year.

Steamship Trading Company shares were up 12 per cent over the month, although they are still down 5.3 per cent over the year.

The Australian All Ordinaries Index rose 3.4 per cent over the month and is up 13.3 per cent over the year.

America’s S&P 500 had a monthly rise of 3.9 per cent and is up 16.7 per cent over the year according to Kina Securities.

The Kina was down 0.2 per cent over the month against the US dollar. The currency was up 1 per cent over the month against the Australian dollar, according to Kina Securities.

Half-year Treasury Bills are 4.71 per cent, while full-year Bills are 6.66 per cent.