Total: Oddo's only 'buy' stock in oil sector
(CercleFinance.com) - In a report on the oil sector, Oddo says that supply could fall by 2.
1m b/d in 2020. The IEA expects demand to fall by 0.73m b/d this year in its worst-case scenario. This is being confirmed and will probably be exceeded, with a possible destruction of demand amounting to around 2.1m b/d in 2020.
Oddo says that demand from transport represents 50% of global oil demand, i.e. 50m b/d.
Oddo believes that the weakest producers will disappear, saying that this price war will damage the sector by hitting high-cost producers.
Prices will remain under pressure over the next few months, but will increase again thereafter. The price may fall below analysts' scenario ($45/$55/b in 2020/21), although a recovery towards a marginal cost of $55/b is inevitable from a fundamental viewpoint.
The broker says that it has only one buy rating in the sector - that on Total, which has the lowest gearing and breakeven point in the sector, and which could better resist with a dividend yield and a very attractive valuation. The share price has fallen sharply, in line with Brent oil prices, which is rare, although probably due to massive sales by funds to raise liquidity. It says that this fall presents investors with an opportunity to return to the share.
Copyright (c) 2020 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.
1m b/d in 2020. The IEA expects demand to fall by 0.73m b/d this year in its worst-case scenario. This is being confirmed and will probably be exceeded, with a possible destruction of demand amounting to around 2.1m b/d in 2020.
Oddo says that demand from transport represents 50% of global oil demand, i.e. 50m b/d.
Oddo believes that the weakest producers will disappear, saying that this price war will damage the sector by hitting high-cost producers.
Prices will remain under pressure over the next few months, but will increase again thereafter. The price may fall below analysts' scenario ($45/$55/b in 2020/21), although a recovery towards a marginal cost of $55/b is inevitable from a fundamental viewpoint.
The broker says that it has only one buy rating in the sector - that on Total, which has the lowest gearing and breakeven point in the sector, and which could better resist with a dividend yield and a very attractive valuation. The share price has fallen sharply, in line with Brent oil prices, which is rare, although probably due to massive sales by funds to raise liquidity. It says that this fall presents investors with an opportunity to return to the share.
Copyright (c) 2020 CercleFinance.com. All rights reserved.
The information and analyses distributed by Cercle Finance are only intended as decision-making support for investors. Cercle Finance's responsibility may not be entailed, either directly or indirectly following the use of such information and analyses by readers. Any non-professional investor is recommended to consult a professional advisor before making any investment decision. This indicative information in no way constitutes any invitation to sell or buy securities.