Bank of America raises oil price forecast, slashes oil stock ratings
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Bank of America's global oil team lifted oil price forecasts across the board, raising 2022 / 23 Brent forecasts to $110 / $95 from $85 / $75, respectively; the long-term price forecast was lifted from $60 to $70.
The bank sees risk of a spike to $150 Brent, on the back of war in Ukraine.
However, US analyst Doug Leggate is "disinclined to chase spot prices" writing that now is the time to rotate out of high-beta oil stocks, and into high-quality names and refiners.
Leggate downgraded Ovintiv (NYSE:OVV), Occidental (NYSE:OXY), Northern Oil (NYSE:NOG), Conoco (NYSE:COP), Diamondback (NASDAQ:FANG) and EOG (NYSE:EOG) to hold from buy in Tuesday's note.
Interestingly, the US analyst calls the environment a "golden age" for US refiners, as a pivot to bio-fuels has reduced capacity industry wide, and the crisis in Europe has raised operating costs for European competitors.
Doug upgrades Holly (NYSE:HFC), PBF (NYSE:PBF) and Delek (NYSE:DK) in Tuesday's note.
In Europe, analyst Christopher Kuplent upgrades Equinor (NYSE:EQNR) to buy, citing structurally higher natural gas prices in Europe.