Business and Investing Research On Emerging & Frontier Markets
Analysts get bullish on crude oil's prospects in 2017
December 15, 2016
Bernstein Energy's fourth quarter survey on oil prices find investors bullish on oil, bearish on gas, and favour oil exploration and production companies, but also but see services in a new light post-OPEC.
More than 75% of the 79 investors surveyed see oil price staying in the $50-60/bbl range for the next year. Only 13% of the respondents voted for near-term oil prices of $40-50/bbl. The $50-60/bbl price bracket received 76% of the votes (vs. 61% in last quarter) while the $60-70/bbl bracket received 10% of the votes (vs.7% last quarter).
"Investors' short-term expectations about oil prices were only 1.5% above strip prices this quarter., Bernstein said in a report. "However, gas prices expectations were 9% below strip prices. Survey respondents stand at 15% above 2-year oil price strip and 6% above the 2-year gas price strip."
Expectations for gas price also rose this quarter. "The share of votes for $3-3.50/mcf bucket in the short term rose to 59% (vs. 40% last quarter). Over the longer term, 46% of the respondents voted for the $3-3.50/mcf bracket (vs. 49% last quarter)," Bernstein said.
Meanwhile, Moody's Investors Service expects the outlook for integrated oil and gas sector to be stable, with EBITDA rising by about 5%, buoyed by stabilizing capital spending and a substantial re-alignment of cost structures Exploration and production companies should fare better in 2017, with oil and gas prices improving from 2016's lows, and commodity price hedging increasing.
"Combined with reduced drilling and service costs, EBITDA is expected to grow 20% to 30% for exploration and production firms in the coming year, supporting the sector’s positive outlook," Moody's said in a report.