Market Overview

Bank Of America Remains Bullish On Oil

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In a note titled "Living in an $80 world," Bank of America analyst Douglas Becker continues to call for $98 per barrel Brent and $90 per barrel WTI, a meaningful increase from current levels of and $82.50 and $77.40, respectively.

In the note, Becker goes on to talk about Oil Service stocks, noting that he is "Still expecting a U-shaped recovery. Gut checks in the oil services sector are not unusual. In fact, Brent crude oil prices have had at least an 18% pullback in each of the last three years, although only once dipping below $90/bbl, and then only briefly."

Some other insights include;

  • Focus on subsea equipment,
  • Frac sand supply-demand tenuous with lower oil prices,
  • U.S. rig count could decline 150 rigs assuming $80 WTI,
  • Offshore drillers still our least favorite subsector.

Shares of Market Vectors Oil Services ETF (NYSE: OIH) closed Monday at $44.55, down nearly 9 percent year to date.

 

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Posted-In: Analyst Color Commodities Markets