Though Big Oil is expected to have a slightly less spectacular year in 2007 than it did this year, it is still likely to remain at historically high levels thanks to strong demand in China and the Middle East, output-tightening by OPEC and instability in Nigeria and Iraq. Merrill Lynch has published a report stating that Exxon Mobil and Chevron, which are trading at record-high levels, still have room to rise. Merrill raised share-price targets on those two companies as well as ConocoPhillips even as it lowered its 2007 oil-price forecast from $65 to $60 on the back of generally lower demand and rising supply from non-OPEC members. Merrill also upgraded four E&P companies -- Anadarko, Noble Energy, Encana and Canadian Natural Resources -- which it believes will benefit from increased demand for natural gas that should result from higher oil prices.
• Sources: MarketWatch, Business Week
• Related commentary: Chevron, ConocoPhillips Going Opposite Directions With CapEx in 2007, 3 Reasons Why I Bought ConocoPhillips, Fuel For Thought: Which Integrated Oil Company Should You Own?
• Potentially impacted stocks and ETFs: Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP), Hess Corp. (NYSE:HES), Marathon Oil Corp. (NYSE:MRO), Anadarko Petroleum Co. (NYSE:APC), Noble Energy Inc. (NYSE:NBL), Encana Corp. (NYSE:ECA), Canadian Natural Resources Inc. (NYSE:CNQ), WisdomTree LargeCap Dividend (NYSEARCA:DLN), WisdomTree Total Dividend (NYSEARCA:DTD), streetTRACKS DJ Wilshire Large Cap (ELR), Vanguard Energy ETF (NYSEARCA:VDE), iShares Dow Jones US Oil & Gas Ex Index (NYSEARCA:IEO), United States Oil Fund LP (NYSEARCA:USO)
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