LAHORE - The equity market witnessed chaotic and short week due to three holidays, with court decision regarding the OGDCL remaining in the limelight. The KSE-100 index closed almost flat with an increase of only 55 points or 0.2 per cent to close at 30,158 level.

There were only two trading days at the bourse as the three-day Eid holidays started from Monday. However, the benchmark index recorded significant fluctuation in a short span two days, as it fell below 30,000 points on Thursday before inching up again on Friday.

According to experts, with recent weakness in international oil prices, energy analysts across the globe made downward revision to their oil price forecasts. The 30-analyst poll on oil prices by Reuters suggests Brent crude oil would average $106.1/bbl in 2014, US$103.3/bbl in 2015 and US$101.4/bbl in 2016. The poll also suggests that WTI crude would average US$98.9/bbl in 2014, US$96.1/bbl in 2015 and US$95.4/bbl in 2016. Following historical parity with Brent crude, Arab Light crude  would average $104.5/bbl in 2014, $101.7 in 2015 and $99.9/bbl in 2016.  Experts said that oil sales of E&P companies in Pakistan are influenced by international crude prices while gas sales vary depending on various petroleum policies. Most wellhead gas prices in Pakistan are capped and fall under Petroleum Policy 2001, which offers average realized gas price of $15.6 per barrel of oil equivalent (boe). Hence, most gas prices (in US$-terms) will not change unless international crude prices drop below $36/bbl.

The market opened on a negative note following the Peshawar High Court’s decision in the previous week that blocked the sale of shares in Oil and Gas Development Company Limited (OGDCL). However, the Supreme Court allowed the OGDCL book-building process to continue. The news was well received and brought stability in the oil and gas sector. In spite of political noise, Government is continuing with its privatization policy. Pakistan government will be offering 322m of Pakistan’s largest $10.6b firm, Oil & Gas Development Company (OGDC), capitalizing on foreign buying-led stock market bull-run. The success of this deal will not only have a positive impact on local bourse but will also endorse that it is business as usual after the Islamabad protests. Moreover, it will provide the much-needed boost to upcoming US-Dollar Sukuk and other privatization deals. This could be the largest offering in Pakistan in Pak-Rupee terms. So far in 2014, 4 offerings have been made at Karachi Exchange worth Rs55b and all have been largely oversubscribed. Large offerings (like UBL and PPL) in the last few months have substantially increased tradable free-float. After this offering, analysts expect free-float will increase to $18b (27% of market cap) from US$14bn (24% of market cap) at the beginning of 2014.

The Sindh High Court restrained Sui Southern Gas Company (SSGC) and the Oil and Gas Regulatory Authority (Ogra) from levying the gas infrastructure development cess, despite a presidential ordinance. The news proved to be a catalyst for the fertiliser and cement sectors, which are heavy consumers of gas.

During the week, the country’s foreign exchange reserves received a boost after the United States disbursed $364 million under the Coalition Support Fund. The reserves rose $190 million to $13.4 billion, according to latest figures of the State Bank of Pakistan.