Broker snap: Credit Suisse cuts forecasts across oil sector

LONDON (ShareCast) - The fall in oil stocks today can be in part credited to Credit Suisse (NYSEArca: CSMA - news) which slashed its fourth quarter earnings per share (EPS) across the global Integrated Oil sector, assessing its coverage on UK stocks Shell (LSE: RDSB.L - news) , BP and BG. For Royal Dutch Shell, Credit Suisse anticipates a "particularly weak" fourth quarter and cut its EPS forecast by 29%. The broker highlights risks to Shells target of 3.7mbd in 2014 given weak US gas prices. Nevertheless, an outperform rating is maintained. For BP, the broker has cut its fourth quarter EPS estimate by 9% but reiterated its outperform recommendation on the stock. It expects a 5% year-on-year decline in volumes in E&P, and a 42% quarter-on-quarter decline in R&M earnings before interest and tax due to "weak global refining margins, the swift narrowing of the WTI-Brent spread hurting BP's US Mid-Con and Gulf Coast margins, maintenance at Whiting, and weak demand in chems and marketing." The broker says that BP should be able to raise its dividend in February but warns that management may wait for a for resolution to the Macondo oil spill disaster before taking any action. One stock that withstood any fourth quarter downgrades was BG Group (Hamburg: BGO.HM - news) which remains Credit Suisse's 'focus list stock'. "BG's annual strategy update tends to be a positive catalyst for the shares, and we expect 2012 to be the same. BG should give some guidance on the "opportunity loss" from the 2010-11 pricing hedges in LNG (liquefied natural gas), and reiterate its bullish view on the LNG market post-Fukushima," analysts said. London-listed oil and gas producers fell by an average 1.37% on Friday morning, with heavyweight constituents Shell, BP, Essar Energy (Dusseldorf: 11224817.DU - news) and Petrofac (EUREX: P2FF.EX - news) all falling on the FTSE 100 (Euronext: VFTSE.NX - news) . Even oil and gas services firms Weir and AMEC (LSE: AMEC.L - news) were taken down a peg too.