PaineWebber ups oil outlook
PaineWebber analyst Frank Knuettel said Thursday he
raised his Year 2000 price forecast for benchmark crude oil
Brent by $1.50 to $20.00 a barrel, adding that the industry's
outlook is far stronger than the stock market reflects.
- In a research report, said major oil company stocks are
trading at the same relative valuation to the S&P
Industrials as they traded in February, 1999, when oil
prices were more than 50 percent lower than today.
- Said it is unlikely that oil prices will drop to last
February's level because of solid compliance by the
Organization of Petroleum Exporting Countries
(OPEC) to output cuts.
- Said that expected declines in oil inventories could
prompt OPEC to raise its 2000 oil output by 1.8
million barrels a day this year.
- Added that strong oil prices will keep pressure on
profit margins in the refining and marketing business, at
least in the early part of the year, and will likely
preclude an upturn in petrochemicals.
- "We conclude that it is time to add to oil shares, both
as an offensive measure to capture what we believe are
good values in our universe and as a defensive posture
in the event other sectors take a breather," Knuettel
said.
- Recommended a 150 percent weighting in the major oils.
Said "buy" rated stocks include Amerada Hess, USX-Marathon,
Murphy Oil and Vastar Resources.
Said "attractive" stocks include Royal Dutch Petroleum,
Shell Transport & Trading, ExxonMobil, TotalFina, Chevron,
Conoco, Imperial Oil, Phillips Petroleum, Occidental Petroleum
and Unocal. |
