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Morgan Stanley is banking on higher summer oil prices to extend into the fall. A combination of stronger demand and supply cuts pushed crude oil prices higher in the second half of the summer after showing encouraging signs of lower prices. OPEC+, which includes Russia and other nations included in the Organization of the Petroleum Exporting Countries, most recently announced an additional supply cut last month equating to about 1.16 million barrels per day. On Tuesday, oil prices notched their highest level since November 2022, according to FactSet data. Morgan Stanley says the U.S. energy sector is trading at a roughly 50% discount compared to the broader market, when judged by enterprise multiple’s of some firms. Here are Morgan Stanley’s picks to play the trend higher in oil prices. The firm maintains an equal weight rating on oil major Chevron , accompanied by a $198 per share price target. Morgan Stanley’s forecast implies roughly 21% upside from Monday’s $163.76 close. CVX YTD mountain Chevron stock has slipped nearly 9% from the start of the year. Elsewhere, Morgan Stanley rates both ConocoPhillips and Hess at overweight, with price targets of $124 and $158, respectively. That implies about 3% upside for ConocoPhillips and less than 1% for Hess when compared to closing prices from Monday. Among Canadian equities, Morgan Stanley also mentions Cenovus Energy with an overweight rating and a $31 per share price target. The firm’s forecast implies more than 54% upside from Monday’s $20.11 close. CVE YTD mountain Cenovus stock has climbed roughly 4% from the start of 2023. — CNBC’s Michael Bloom contributed to this report.
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