The oil cartel said that while demand growth has not shown any signs of increasing, the prospect of low prices for oil would increase demand later in the year and upped its 2015 forecast as a result.
Production of U.S. shale, which OPEC blames for the glut of supply driving down prices, will slow since the crude is costlier to produce and and will be harder to maintain when oil prices are low, according to the Wall Street Journal.
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"Crude oil prices started 2015 at a near six-year low, amid plentiful global oil supplies that have pushed oil prices down by almost 60% since June 2014. This time the sharp fall in prices has been mainly driven by excess supply. As a result, lower prices are likely to help to accelerate the pace of oil demand growth this time," OPEC said.
OPEC forecast that demand for its oil would increase to about 29.21 million barrels per day in 2015, over 400,000 barrels per day better than its previous estimates.
Industry standard West Texas crude for March delivery is up 2.57% to $53.02, while Brent crude is up 1.09% to $58.43 in trading today.
TheStreet Ratings team rates CONOCOPHILLIPS as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONOCOPHILLIPS (COP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strongest point has been its strong cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 21.4%. Since the same quarter one year prior, revenues fell by 11.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $2,462.00 million or 37.04% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- CONOCOPHILLIPS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CONOCOPHILLIPS reported lower earnings of $4.61 versus $6.43 in the prior year. For the next year, the market is expecting a contraction of 75.5% in earnings ($1.13 versus $4.61).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 101.6% when compared to the same quarter one year ago, falling from $2,487.00 million to -$39.00 million.
- You can view the full analysis from the report here: COP Ratings Report