Oil prices are projected to close in on $150 per barrel within the next month or two. AFP

Last week's gains among Hong Kong-listed oil refiners are a distant memory as analysts said crude prices of $150 a barrel may not be far off.

Oil refiners didn't take the news well yesterday.

Sinopec, the mainland's largest refiner, lost 2.35 percent to close at HK$7.89. The stock had gained 1.13 percent on Friday after fuel prices were raised on the mainland.

PetroChina, the second largest refiner, fell 0.19 percent to HK$10.44. The drop followed Friday's 1.55 percent gain.

As an offshore crude-oil producer, CNOOC was spurred by the surge in global oil prices, ending the day up 1.58 percent to HK$12.82.

"The upward trend of crude oil is obvious," said Castor Pang, a strategist at Sun Hung Kai Financial. "Oil refiners and producers are stocks that we should closely watch."

He added that the global oil-price trend may not have a direct impact on the stocks, but the stocks will be volatile on speculation.

Pang said the outlook of CNOOC is more positive, with a target price of HK$14.50. But Sinopec, he said, will have difficulty testing the HK$8 level, and PetroChina may struggle to top HK$11.

"It is not a surprise that the crude prices could hit $150 per barrel in the short run," said Matthew Kwok, a research head at Tanrich Financial.

As the oil refiners' share prices have already priced in the beneficial fuel-price hike, Kwok said Sinopec may drop further on surging crude prices, and "HK$7.50 will be the next support level".

Vice President of ADMIS Hong Kong Alex Poon agrees, saying: "The US crude futures price is likely to test $143/144 per barrel shortly," he said. "It won't be surprising if it hits $150 per barrel."

Saudi Arabia officials have said the country is prepared and willing to pump more oil, but noted that the prices have been raised amid disruption in Nigerian crude output and supply worries stoked by escalating tension between Israel and Iran.

In the early trade in London yesterday, US crude oil and London Brent crude futures climbed more than $2 per barrel, trading above $137 on supply worries.

"The high oil prices will hurt the profits of US corporations, smashing the stock market sentiments," Pang said.

Hong Kong shares overall moved sideways in skittish trade yesterday. The benchmark Hang Seng Index (HSI) closed down 0.13 percent to 22,714.96 points.

The mainboard turnover fell to HK$59.68 billion from Friday's HK$72.69 billion.

Pang warned that if the high crude prices kill consumer confidence and drag US stocks, the HSI may follow and only be able to find support at the 21,700 level.

(HK Edition 06/24/2008 page2)