Johannesburg – Sasol led the gains on the JSE yesterday, helped by the strengthening of the oil price and a weaker rand against the US dollar.
Sasol in intraday trade went through a high of R203.89 a share – the highest in over a month, before closing the day at R196.73. The company’s share price rally follows Friday’s surprise trading update indicating a 200% jump in headline earnings a share for the half year ended December.
Oil prices neared one-year highs on Wednesday following the Opec+ alliance of major producers maintained its supply cut agreement and the US stockpiles fell to their lowest levels since March.
Brent crude hit the highest level since February last year after rising by 1.74% to $58.46 (r873.57) a barrel on Wednesday, and was 0.22% higher yesterday at $58.98 a barrel.
According to Old Mutual Investment Group Head of Equities Research, Meryl Pick, the recovery in the oil price was a tail wind that had come at the right time for Sasol.
“If the oil price remains around these levels, there could be more upside to Sasol,” she said, adding that Opec’s commitment to keeping the market tighter and prices at between $50 a barrel and $60 a barrel would make it possible for Sasol’s products to be profitable.
In March last year Sasol announced plans to beef up its balance sheet through asset disposals and a potential rights issue of up to $2billion.
The company sold its 50% interest in the Lake Charles Chemicals Project Base Chemicals Business last October as part of the asset sale process
