Oil stocks plunge on international price fall

Prices are displayed at a petrol station in Seoul on Aug. 21. Yonhap

By Lee Min-hyung

Oil stocks here plunged Wednesday amid falling crude oil prices caused by fears of possibly diminished oil demand due to global economic uncertainties.

According to data from the New York Mercantile Exchange, the West Texas Intermediate for October delivery came in at 91.64 dollars a barrel, a drop of 5.5 percent from the previous trading day.

In response, shares of Korea's major oil refiners plummeted soon after the opening of the stock market. S-Oil, the nation's major petroleum and refinery firm, fell by more than 4 percent on Wednesday morning, hit hard by external market uncertainty. S-Oil shares closed at 101,500 won, a drop of 3.33 percent from a day earlier, on the main bourse here.

Other oil stocks ― such as SK Innovation, GS and Kumho Petrochemical ― also extended losses on the same day for a similar reason. SK Innovation shares finished at 190,000 won, down 3.31 percent during the same period. The stock price of GS also ended with a loss of 1.29 percent.

The oil price plunge was attributable to revived concerns concerning global monetary tightening after the U.S. Fed signaled its willingness to remain hawkish for months to come amid soaring inflation. As a tighter monetary policy increases the risk of a possible economic slowdown, fears have resurfaced here and abroad that the imminent economic slump will end up weakening demand for oil.

However, the local securities industry did not rule out the possibility of the international oil price re-entering the $100 mark per barrel.

“Oil prices may regain the momentum for bullish moves in winter (despite the recent fall in valuation),” NH Investment & Securities analyst Hwang Byung-jin said, citing the possibility of decreased supply coupled with surging demand for oil as a substitute for natural gas.