Here's the Merrill (sold my ECA and CNQ this a.m., LOL):
Industry/Sector Updates
Oil Industry: US Based Integrateds & NA E&Ps Commodity
Price Forecasts Changes – Upgrading APC, CNQ,ECA, NBL &
WLL
Oil – With adequate global & US inventories, a weaker US dollar, 70% and likely
further OPEC compliance to the 11/1/06 1.2 MMBbls/d cut, a forecast of a weaker
US, but stronger global economy in ’07. N.A.
Natural Gas – Remains a supply
driven and not demand-pull market.
We still view the integrateds as being
fundamentally undervalued vs the market and thus have increased PO for XOM,
CVX, and COP. In the case of the N.A. E&Ps, we’re upgrading to Buy from
Neutral in the large caps APC, NBL, ECA, and CNQ and WLL for the small caps
given longer term valuation visibility, and are increasing E&P price targets for
DVN, NFX and PPP.
Energy Strategist: 2007 Energy Market Outlook –
We are lowering ‘07 WTI crude oil price forecast to $60/bbl, from $65/bbl, as non-
OPEC supply expands against decelerating global oil demand picture. Raising ‘08
WTI crude oil price forecast to $62/bbl, from $50/bbl, as we expect global oil
demand to strengthen again & non- OPEC production growth to slow. In spite of
higher non-OPEC supplies, geopolitical outlook in oil producing regions is not
getting better. Gasoline, distillate cracks will likely remain firm. We forecast 2Q &
3Q ‘07 US natural gas prices to average $7.10/mmBTU & $7.30/mm BTU. |
