KUALA LUMPUR: Kenanga Research is maintaining its "neutral" call on the oil and gas sector.

In a note today, the research house said the call was with a positive bias in view of better contract flows from Petronas and other oil major companies.

The sector's results disappointment ratio narrowed to 40 per cent in the fourth quarter 2016 versus 56 per cent in the third, it said.

"A higher number of outperformers were mostly Petronas stocks in the recently concluded four quarter result season.

"However, of our total 15 core coverage stocks, five offshore services players ended the year with core losses largely marred by stubbornly high fixed cost amidst lower revenue," Kenanga Research said.

Meanwhile, another round of kitchen sinking on unutilised vessels and doubtful debts at bigger quantum were seen in the fourth quarter.

"Greater compliance for the Organisation of the Petroleum Exporting Countries and other producers, including Russia, to curb production is positive to oil prices stabilisation.

"But, the upside is limited on continuous oil inventories build-up and rebound in rigs count," it said. --Bernama