Jefferies Lowers Oil & Gas Price Forecasts

Jefferies analyst Jonathan Wolff has updated the firm’s outlook for oil & gas prices and adjusted its ratings on several E&P stocks in the space.

In terms of gas, Jefferies has dialed back its price forecast by $0.50 for both 2016 and 2017 to $3.00 and $3.50, respectively. However, the firm maintains its long-term above-consensus bullish forecast of $4.00 for gas prices beyond 2017.

When it comes to oil prices, Jefferies is not as bullish. “OPEC is producing flat out into a market that is overwhelmed by over 1 MM b/d; already decelerating demand growth could further decay with slowing economic activity; and OECD inventories that are already at record levels are likely to expand through at least the middle of the year,” Wolff explains.

Related Link: Deutsche Bank Says $55 Oil Predicted Weeks Ago Now Seems Unreasonable

Jefferies is now calling for Brent prices of $43/bbl in 2016, $57.75/bbl in 2017 and $71.75/bbl in 2018.

Based on the updated outlook, the firm has downgraded EQT Corporation EQT and Concho Resources Inc CXO from Buy to Hold and upgraded RSP Permian Inc RSPP from Hold to Buy.

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