SINGAPORE - Companies involved in offshore oil services may have under-performed the stock market this year, but the current market turmoil may create pockets of opportunity for investors.

These cyclical stocks are expected to bounce back strongly when the economy recovers, which some expect could be as early as next year.

The so-called offshore sector includes oil-rig builders, shipbuilders and marine companies that service oil exploration.

The industry has been hit this year by a slide in oil prices and an oversupply of shipping.

But, considered a cyclical industry, analysts are looking beyond the current global slowdown and market volatility.

Analysts said the sector has under-performed the wider market so far. It has dropped over 20 per cent year-to-date, compared to the stock market which has fallen about 13 per cent.

" What we are seeing is that yards that fabricate high spec and offshore drilling and production units are more well positioned to secure new orders going forward, whereas for shipbuilders of certain offshore support vessels, are still waiting to see the oversupply situation run its course," said OCBC Bank investment analyst Low Pei Han.

Analysts said there may be good opportunities to start picking up these offshore stocks which are trading at a discount now. Some of the top picks Sembcorp Marine and Keppel Corp are down 26 per cent and 12 per cent respectively this year.

Both rig builders are expected to be supported by long-term spending by oil companies for exploration and production.

Shipbuilder Jaya and marine services company Ezion also have plenty of buy recommendations among brokers, as these companies have relatively full order books.

" We're bullish on them mostly on the medium and the long-term fundamentals, we believe the fundamentals remain intact. That's supported by the investment spendings by the oil companies because the world is facing a shortage of supply production in the medium and long term," said Mr Kay Lim, head of Securities Research, DNB Markets.

He also said that " we have a global oil replacement ratio of just 87 per cent, so oil companies continue to spend, to explore, especially in the offshore fields, in order to get the oil and gas reserves out" .

" No doubt oil prices have faced downward pressure since the macro issues, but the thing is if you look at the oil pricing, they have managed to stay relatively resilient so far year to date and still up 13 per cent, versus most of the assets classes which are down for the year," he added.

In the short-term, the sector's stock prices are likely to be weighed down by the wider sentiment over the global economy.

However, market watchers point out that these cyclical stocks are expected to be among the first to bounce back when the market turns around.