Goldman Sachs analyst Nilesh Banerjee added China National Offshore Oil Corporation, or CNOOC (CEO), to its conviction list on Wednesday as Brent oil prices could rise in coming months as demand in China rises. The stock is trading as if Brent oil prices were $75 per barrel, as opposed to $100.
“With Brent trading below US$100/bbl vs. our 2012 estimated average of US$120/bbl, we believe risk-reward for the oil market has improved with a steady outlook on� Asian demand amid recovery in Chinese demand in 2H 2012. Moreover, we note many new high cost E&P projects would need oil prices of US$100+/bbl to recover costs, lending support to oil prices.� Given the best exposure to global oil prices, we add CNOOC (H) to CL-Buy from Neutral post recent correction in share prices, with our new target price of HK$17.5 implying 20% upside.”
CNOOC is up 1.2% this afternoon, while U.S. based oil stocks are more mixed. Exxon Mobil (XOM) is trading flat and Chevron (CVX) is up 0.3%.
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