The commodities team at Morgans upgrades oil price forecasts for the sector for 2021-2023 following a surprise move from OPEC to maintain supply cuts in April and the ongoing recovery of oil market fundamentals.
The broker believes supply is poorly positioned to absorb ‘lost barrels’ due to the damage incurred by two once-in-a-decade oil price downturns in the last five years.
The analysts upgrade price forecasts for 2021-23 to US$63/bbl, US$60/bbl and US$60/bbl from US$56/bbl, US$55/bbl and US$56/bbl, respectively.
The analysts believe Oil Search has solid oil price leverage though the share price has already recovered. As other catalysts have recently played out, it’s considered any upside risk is oil-price dependent. Hold rating and target increases to $4.40 from $4.20.
Sector: Energy.
Target price is $4.40.Current Price is $4.36. Difference: $0.04 – (brackets indicate current price is over target). If OSH meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
