Barclays Sees $37 Oil At Most This Year

Oil prices surged to new three week highs on Thursday after Russian Energy Minister Alexander Novak said that Saudi Arabia had proposed a production cut of up to 5.0 percent to help support oil prices.

However, despite the good news, Barclay’s analyst Thomas Driscoll maintains his bearish outlook for oil prices. In a new report, Driscoll drastically lowered the firm’s 2016 crude oil price projections in the face of the recent market weakness.

Barclays is now projecting $37/bbl for WTI in 2016 and $70/bbl for 2017. Barclays remains bearish on E&P stocks as well.

“E&P shares have not fallen quickly enough to get to fair value,” Driscoll explains.

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The firm has downgraded Range Resources Corp. RRC and MEG Energy Corp from Overweight to Equal-Weight on liquidity concerns. The firm has also reduced its price targets for Underweight-rated Chesapeake Energy Corporation CHK and Ultra Petroleum Corp. UPL to $1 each.

Disclosure: the author holds no position in the stocks mentioned.