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Natural Gas: Morgan Stanley’s 2017 Outlook

Oil costs have drifted higher in the second half of 2017 on news that OPEC extended its production cut settlement into 2018. Whereas things may be looking up for oil investors, pure gasoline investors could be in for one more powerful yr in 2018.

The Analyst
Morgan Stanley analyst Devin McDermott reiterated his long-term price projection for natural gas of $2.Seventy five. (See McDermott’s petroleum equipment sales 50 observe record right here.)

The analyst lowered price targets on the next 5 natural gas stocks:
– Antero Sources Corp (NYSE: AR): Equal Weight score, target dropped from $22 to $20.
– Gulfport Vitality Corporation (NASDAQ: GPOR): Underweight rating, goal dropped from $thirteen to $eleven.
– Vary Sources Corp. (NYSE: RRC): Equal Weight rating, petroleum equipment sales 50 goal dropped from $18 to $17.

– Southwestern Vitality Company (NYSE: SWN): Underweight rating, goal dropped from $5.50 to $4.
– EQT Corporation (NYSE: petroleum equipment sales 50 EQT): Equal Weight ranking, goal dropped from $64 to $sixty three.

The Thesis
Rising productivity and effectivity and the rise of renewable vitality will proceed to pressure gas costs within the long-time period, McDermott stated.

A bet on natural gasoline is a wager against innovation, he said.
“While we stay bearish over the medium- to lengthy-term, we continue to consider that quick term prices (winter 2017/18) have overcorrected modestly to the downside.”

Within the near-term, Morgan Stanley is predicting fuel costs will likely bounce to the $three.15 stage via the remainder of the winter earlier than sliding again to a mean price of $2.90 in 2018 and then drifting lower to $2.80 in 2019.

Amongst exploration and production firms, he stated Cabot Oil & Gasoline Corporation (NYSE: COG) is Morgan Stanley’s top stock decide, while Gulfport Power and Southwestern Vitality are its least-most popular names.

Worth Action
Here’s a look at how common natural fuel ETFs had been buying and selling on Wednesday following the bearish Morgan Stanley notice:

– United States Natural Fuel Fund, LP (NYSE: UNG) was down 0.5 %.
– VelocityShares 3X Lengthy Pure Gasoline ETN linked to the S&P GSCI Natural Fuel Index (NYSE: UGAZ) was Petroleum down 2.2 %.
– VelocityShares 3X Inverse Natural Gas ETN linked to the S&P GSCI Pure Gasoline INdex (NYSE: DGAZ) was up 2.2 p.c.

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