Data from investment bank Morgan Stanley shows earnings estimates for the energy sector are being revised higher than an at any time since oil prices hit $146 per barrel back in 2008.
The global benchmark for crude oil, Brent, is trading above $60 per barrel, close to two year highs.
There are several factors behind this surge including strong oil demand from China and India and lower estimates for US shale production.
Perhaps the most significant factor is a suggestion that OPEC will extend its production curbs from the planned expiry date of March 2018 through to the end of next year.
The next meeting of the oil producers’ cartel takes place on 30 November.
As we discussed when looking at Royal Dutch Shell (RDSB) and BP (BP.) here and here the industry has worked hard to streamline operations and reduce costs to adjust to the new oil price reality. This has been reflected in better-than-expected third quarter results from the sector.
Morgan Stanley is bullish on oil and gas and does not feel it is getting credit for these efforts, noting it is the second worst performing sector year-to-date in Europe.
