The Corner | For the second time this month, oil prices dropped below 60 $ per barrel. Growth concerns and a bearish market mood drove the latest sell-off, but fundamentals are now adding to the price pressure. US oil inventories swelled unexpectedly and led to a drop in oil prices.
Bankinter | Recomendation Buy and Objective Price 17,4€/share. The rise in oil prices and growth opportunities will drive the share price. Repsol will be driven by exogenous (the sharp increase in oil prices benefits it directly – Brent YTD +39%) indigenous factors.
Morgan Stanley | With oil up 30% YTD, fairly decent quarterly figures, dividends easily covered, with potential to grow and clearly above a market without upside, and with a process of positive profit revisions, we insist in dedicating half an hour to two ideas which are now being oversold and which have lost all they gained in Q1 and which their high dividend is clearly attractive in the market and which we believe could have returns of around 10% in the relatively short term.
A key issue that President Trump’s speech at the UN General Assembly helped highlight was the rising tensions in the Gulf. As one measure of this, analysts at BNY Mellon note that “while it’s tempting to dismiss this as saber-rattling by both sides, the debate over Iran’s ability to close the Strait of Hormuz has been going on since the early 1980s.”
For any investor who believes that $70/barrel is more or less the right price, then the European oil firms are currently fairly priced. Alphavalue recently upped their earnings forecasts to include $70/barrel as a new normality. This leaves the sector with an upside potential of +6% on a 6-month horizon.
Near-dated crude oil prices have rallied on robust demand and falling inventories, but long-dated prices have not moved. BoAML’s analysts see close to 1.5 mn b/d of output oil facing some risk of disruption, primarily across Venezuela, Iran, and Libya.
Oil continues to flirt with USD 70 per barrel and it remains to be seen if prices are able to lastingly settle above this much-watched level with the latest up move. Global growth optimism, the bullish market mood and technical momentum still provide robust support.
Citi’s research analysts targets two significant issues on this recent decline: disinflation pressures and what would happen if oil prices don’t recover.
Energy markets has been taking a beating with oil and natural gas prices down across the board. For once, the fundamental news flow was ample. The US Energy Administration reported their weekly set of data, which showed a stronger-than-expected increase of crude oil and oil products in storage.
The commodity complex continues to soften with oil prices sliding below USD 50 per barrel and Chinese heavy industry commodities rushing lower. The resource reflation tide recedes with benchmark indices such as the Bloomberg Commodity Index trending towards last year’s levels. Commodity prices revert towards fundamentally reasonable levels on supply rather than demand trends.