Downgrade: from Credit Suisse
Credit Suisse downgrades integrated oil
Credit Suisse downgraded the integrated oil sector to "20% underweight" on its relative outperformance and said oil prices were likely to stay lower for longer.
Separately, the brokerage cut its price targets on eight oil and gas stocks, including supermajors BP and Shell, and said it remained cautious on the integrated oil group.
Credit Suisse trimmed its price target on the group by an average of 11% and said it expects the group's earnings to fall by 61% year-on-year this year.
"Although the dividend and buyback support has been a positive relative attribute in a tough equity market, the sector's payout is unsustainable in a sub $70 oil world," Reuters quoted the brokerage saying in a note to clients.
Credit Suisse, which said the sector is "deeply underwater on its cash cycle", added that it expects the sector to generate negative free cash of $56 billion in 2009, and a further negative $25 billion in 2010.
Credit Suisse also lowered its West Texas Intermediate price forecast for 2009 to $50 a barrel from $60 per barrel and cut its 2010 estimate to $60 per barrel from $80 per barrel.