Latest news with #MartijnRats
Bloomberg
4 days ago
- Business
- Bloomberg
Morgan Stanley Sees Three More OPEC+ Hikes Driving Brent Lower
OPEC+ is set to continue returning production for another three months, which will help drive oil prices lower, according to Morgan Stanley. The eight key members in the cartel that had voluntarily cut output in November 2023 announced a fourth consecutive clawing back of those reductions on Saturday. That would mean the full 2.2 million-barrel-a-day decrease would be unwound by October, Morgan Stanley analysts including Martijn Rats said in a June 2 note.
Yahoo
13-05-2025
- Business
- Yahoo
Morgan Stanley updates view on energy stocks: BP downgraded, TTE raised to Buy
-- Morgan Stanley reshuffled its ratings on European energy majors, downgrading BP (NYSE:BP) to Underweight, cutting Equinor (NYSE:EQNR) to Equal-weight, and upgrading TotalEnergies (EPA:TTEF) to Overweight, citing a deteriorating oil price outlook and the sector's vulnerability to weaker balance sheets. Shell, remains the Wall Street giant's top pick in the sector, but its overall industry view has reverted to 'Cautious' amid expectations for a meaningful surplus in the oil market starting in the fourth quarter. Morgan Stanley now forecasts Brent crude to fall to around $55 per barrel in the first half of 2026, weighed down by a 'triple headwind' of weaker demand due to tariffs, rising non-OPEC supply, and OPEC's easing of production cuts. As a result, it sees downside risk to earnings and buybacks and expects net debt to rise over time, weighing on equity performance. 'The sector trades on a 'genuinely free' free cash flow (FCF) yield of just ~6%, on our estimates,' analysts wrote, after adjusting for hybrid bond and lease liability payments. The downgrade of BP was driven by elevated balance sheet risk and limited upside. Analysts noted BP is 'by far the most leveraged amongst peers,' and warned its free cash flow yield after hybrid bond and lease payments drops to just ~5% in 2026. 'We downgrade the stock to Underweight,' analysts led by Martijn Rats wrote, adding that the earnings forecasts for BP are the furthest below consensus in the group. Equinor was cut to Equal-weight as analysts cited a more challenging capital allocation narrative, including its exposure to troubled offshore wind projects and rising gearing. While Morgan Stanley sees upside to Equinor's 2025 earnings, they expect buybacks to fall from $5 billion this year to $1.5 billion annually from 2026 onward. TotalEnergies was upgraded to Overweight, with the bank highlighting its 'strategic consistency,' defensive qualities, and better positioning relative to peers under a weaker macro backdrop. 'We see less downside risk to consensus estimates,' the analysts said. Valuation is no longer a clear support for the sector, according to the note. On Morgan Stanley's estimates, the sector trades at around 5x forward Cash Flow From Operations (CFFO) – close to a two-standard deviation premium to history—making the risk-reward profile increasingly unattractive. Related articles Morgan Stanley updates view on energy stocks: BP downgraded, TTE raised to Buy Citi upgrades PDD: Says tariff reductions positive for China cross-border sellers FTSE 100 today: Index gains as U.S., China agree to temporarily reduce tariffs
Business Insider
12-05-2025
- Business
- Business Insider
TotalEnergies upgraded to Overweight from Equal Weight at Morgan Stanley
Morgan Stanley analyst Martijn Rats upgraded TotalEnergies (TTE) to Overweight from Equal Weight with an unchanged price target of $60.80. The firm adjusted ratings in the European energy group, saying the sector's 'fortunes remain closely tied to oil markets.' Morgan Stanley expects oil to enter a 'meaningful surplus' after the summer. As such, it foresees downside risk to earnings and buybacks, upside risk to net debt, and does not find valuations compelling at current share levels. The firm took its industry view back to 'Cautious.' However, TotalEnergies is more integrated along the value chain, which tends to lead to lower earnings volatility during periods of oil price weakness, contends Morgan Stanley. The firm swapped Equinor for TotalEnergies as its second Overweight-rated stock. Protect Your Portfolio Against Market Uncertainty
Mint
29-04-2025
- Business
- Mint
Oil's Rarest ‘Smile' Fascinates Morgan Stanley as Glut Looms
(Bloomberg) -- The global oil market is in very rare territory right now, with futures pricing that points to near-term tightness while also flagging a 'meaningful surplus' further out, according to Morgan Stanley. 'The Brent forward curve has an unusual shape at the moment: downward sloping across the first nine contracts and upward sloping thereafter,' analysts including Martijn Rats and Charlotte Firkins said in a note. 'This is so unusual that, in fact, there is little historical precedent,' they said. Crude has been rocked this month by the fall-out from the US-led trade war, moves by OPEC to boost supply at a faster-than-expected clip, and growing expectations for a surplus. Those drivers have combined to spur a steep drop in headline prices in April — with Brent 12% lower — but simultaneously suggest a more complex underlying story about the timing of the glut. At present, Brent's nearer months are still pricier than those next in sequence, a pattern known as backwardation that's seen as bullish as it shows traders are willing to pay a premium for more prompt barrels. But the curve flips to the opposite structure, known as contango, further into 2026. 'The contango after the ninth contract signals a rapid weakening later this year, with slowing demand and robust supply growth driving a surplus,' the analysts said. 'In about 30 years' of historical data, there has not been another period when the forward curve showed a 'smile' the way it currently does.' Global benchmark Brent is expected to drop back into the low $60s-a-barrel later this year, according to Morgan Stanley, which retained its existing quarterly forecasts. Futures for the soon-to-expire front month of June were last at $65.03 a barrel, while those for July were about $1 lower. 'Trade tariffs will turn into a meaningful headwind for oil demand,' the analysts said. 'Our crude balance shows a deficit in the third quarter, but this turns into a meaningful surplus thereafter.' (Updates prices in penultimate paragraph.) More stories like this are available on First Published: 29 Apr 2025, 11:22 AM IST
Yahoo
29-04-2025
- Business
- Yahoo
Oil's Rarest ‘Smile' Fascinates Morgan Stanley as Glut Looms
(Bloomberg) -- The global oil market is in very rare territory right now, with futures pricing that points to near-term tightness while also flagging a 'meaningful surplus' further out, according to Morgan Stanley. New York City Transit System Chips Away at Subway Fare Evasion NYC's Congestion Toll Raised $159 Million in the First Quarter Newsom Says California Is Now the World's Fourth-Biggest Economy The Last Thing US Transit Agencies Should Do Now At Bryn Mawr, a Monumental Plaza Traces the Steps of Black History 'The Brent forward curve has an unusual shape at the moment: downward sloping across the first nine contracts and upward sloping thereafter,' analysts including Martijn Rats and Charlotte Firkins said in a note. 'This is so unusual that, in fact, there is little historical precedent,' they said. Crude has been rocked this month by the fall-out from the US-led trade war, moves by OPEC+ to boost supply at a faster-than-expected clip, and growing expectations for a surplus. Those drivers have combined to spur a steep drop in headline prices in April — with Brent 12% lower — but simultaneously suggest a more complex underlying story about the timing of the glut. At present, Brent's nearer months are still pricier than those next in sequence, a pattern known as backwardation that's seen as bullish as it shows traders are willing to pay a premium for more prompt barrels. But the curve flips to the opposite structure, known as contango, further into 2026. 'The contango after the ninth contract signals a rapid weakening later this year, with slowing demand and robust supply growth driving a surplus,' the analysts said. 'In about 30 years' of historical data, there has not been another period when the forward curve showed a 'smile' the way it currently does.' Global benchmark Brent is expected to drop back into the low $60s-a-barrel later this year, according to Morgan Stanley, which retained its existing quarterly forecasts. Futures for the soon-to-expire front month of June were last at $65.03 a barrel, while those for July were about $1 lower. 'Trade tariffs will turn into a meaningful headwind for oil demand,' the analysts said. 'Our crude balance shows a deficit in the third quarter, but this turns into a meaningful surplus thereafter.' (Updates prices in penultimate paragraph.) As More Women Lift Weights, Gyms Might Never Be the Same Why US Men Think College Isn't Worth It Anymore Healthy Sodas Like Poppi, Olipop Are Drawing PepsiCo's and Coca-Cola's Attention Eight Charts Show Men Are Falling Behind, From Classrooms to Careers The Mastermind of the Yellowstone Universe Isn't Done Yet ©2025 Bloomberg L.P. Sign in to access your portfolio
