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Statoil, Novatek May ‘Suffer’ From Oil Weakness, Bernstein Says

Statoil ASA (STL) and OAO Novatek may “suffer” from possible declines in oil prices because of fuel demand destruction and surplus supply capacity, Sanford C. Bernstein & Co. said.

Statoil was downgraded to “underperform” from “market perform,” while Novatek was cut to “market perform” from “outperform” by Oswald Clint, a London-based analyst at Bernstein. PetroChina Co and Santos Ltd. (STO) were also cut to “market perform” from ‘outperform’’ on limited future gains after a “great” performance in the first quarter of the year.

“We are moving to a neutral position on the energy sector, from positive,” Bernstein’s analysts Clint and Neil Beveridge, wrote in a report e-mailed today. “We see real risks of demand destruction in the OECD and therefore expect weakening oil demand comparisons through the remainder of 2011.”

Demand for energy may drop if China continues to raise interest rates to fight inflation and slow down economic growth, Bernstein said. Current higher oil prices are propped up by the unrest in the Middle East and Africa and aren’t justified by demand, with the world’s spare supply capacity staying at about 4 million barrels a day, according to the analysts.

World oil supply was 87.3 million barrels a day last year, according to International Energy Agency estimates.

Brent crude for June settlement climbed 85 cents, or 0.7 percent, to $122.18 a barrel on the London-based ICE Futures Europe exchange at 8:52 a.m. local time. Oil is about 44 percent higher than at the same time last year.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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