Goldman Sachs: Oil Crash Unlikely To Continue
The current selloff in energy stocks is but an opportunity for buyers, according to a Thursday note from Goldman Sachs’ European energy team, who added that current prices are likely unsustainable in the long run.
“We…see the sell off as an attractive buying opportunity in our favored stocks, including Total and Lundin, whilst we have also started to see investor interest in higher beta stocks that have sold off such as Tullow,” said Goldman.
French Total SA (NYSE: TOT), which is trading at $49.53 on Friday, had closed at $49.21 on Thursday—representing a 2.7% drop just four days, and a 9% drop in a month. Tullow Oil (LON: TLW), which has been fairly stagnate over the last few days, has seen an even sharper drop off than Total, down 32% on a month-over-month basis.
But has oil really reached the bottom? Goldman thinks so, but its bullish view is markedly different from a host of other analysts who think we may go lower still, including Bank of America Merrill Lynch (BofAML) who sees $30-oil in 2018 likely, as well as consultants FGE, who said oil is “most definitely” heading to $40, and oil in 2018 could reach $30 oil as new supply exceeds demand growth next year—unless OPEC deepens its cuts.