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WTI and Brent Natural Gas

ConocoPhillips, an independent oil and gas exploration company, forecasts global demand for oil recovering to 100 million barrels per day and increasing from there on, a senior executive said on Thursday, Reuters reported.

According to the latest Reuters report, senior vice president Dominic Macklon said during a Question and Answer session with Raymond James said, “The view stands in contrast to that of rival BP Plc, which sees the coronavirus pandemic leaving a lasting effect on global energy demand, though ConocoPhillips still expects “quite a bit of uncertainty next year”.

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Macklon added that ConocoPhillips’ capital spending for next year will be “somewhat below” its previously expected this year’s level of $6.6 billion.

ConocoPhillips shares closed 2.06% higher at $33.60 on Thursday. However, the stock is still down about 50% so far this year.

ConocoPhillips stock forecast

Twelve analysts forecast the average price in 12 months at $51.45 with a high forecast of $62.00 and a low forecast of $45.00. The average price target represents a 53.13% increase from the last price of $33.60. From those 12 equity analysts, 11 rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley target price is $47 with a high of $69 under a bull scenario and $23 under the worst-case scenario. Wells Fargo raised their price target to $56 from $54; MKM Partners lowered their target price to $55 from $57 and Susquehanna cuts target price to $52 from $54.

A number of other equities research analysts have also recently issued reports on the stock. MKM Partners increased their target price on ConocoPhillips to $58 from $57 and gave the stock a “buy” rating in May. UBS Group increased their target price to $62 from $50 and gave the stock a “buy” rating in June. Raymond James increased their target price to $48 from $46 and gave the stock an “outperform” rating.


Analyst views

“COP checks all the boxes for sustained outperformance: excellent management, disciplined investment, and consistent return of cash coupled with high quality, low-cost portfolio that can deliver an attractive combination of FCF and growth. Attractive value proposition even in the current commodity price environment with leverage to any rally in oil and with resiliency should prices remain low,” said Devin McDermott, equity analyst and commodities strategist at Morgan Stanley.

“Strong balance sheet. While management received some investor pushback in 2019 for building an $8 billion strategic cash balance, that disciplined strategy is paying off in 2020 – creating financial and strategic flexibility,” McDermott added.

Upside and Downside Risks

Upside: 1) Higher commodity prices. 2) Upside to Alaska resource discovery. 3) Better well performance in Lower 48 – highlighted by Morgan Stanley.

Downside: 1) Lower commodity prices. 2) Cost inflation. 3) Alaska discovery has less potential resources than expected. 4) Worse than expected well results in the Eagle Ford, Permian, and Bakken.

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