Four Scottish-based oil companies saw their share values fall yesterday on weaker crude prices and downgrades by Royal Bank of Scotland analysts.
Four Scottish-based oil companies saw their share values fall yesterday on weaker crude prices and downgrades by Royal Bank of Scotland analysts.
Royal Bank cut its price target on BowLeven to 320p from 450p and reduced its target on Cairn Energy to £30 from £45.40. It cut Dana Petroleum to 1800p from £25.45. The forecast for Venture Production was reduced to 750p from 890p.
Traders marked down BowLeven shares by 18p to 102p and Cairn by 212p to 1522p. Dana ended the session 95.5p down at 941.5p, while Venture finished 37.75p adrift at 437.25p.
Royal maintined a "buy" rating on BowLeven, Cairn and Dana and an "add" tag on Venture.
The big oil and gas groups were not downgraded by Royal Bank but lost ground on falling crude oil prices.
BP closed 32.5p off at 414.25p, with Royal Dutch Shell down 104p to 1347p. Elsewhere in the sector, prospector, Tullow Oil lost 56p to 503p, while oil and gas services firm Wood Group was 35.25p worse off at 225p.
Oil prices fell to their lowest in 13 months, dragged down by expectations that economic weakness will cut further into demand for black gold.
US light, sweet crude settled $4.09 a barrel down at $74.54 in late dealing on the New York Mercantile Exchange. It touched a session low of $74.22, its lowest since September last year.
North Sea Brent crude settled $3.73 lower at $70.80 a barrel on London's ICE Futures exchange.
Oil analysts in London said recession in the United States - the world's top consumer of petroleum products - and other key markets could further dampen oil demand.
Oil prices have fallen by 49% since peaking at $147.27 on July 11.
The Organisation of the Petroleum Exporting Countries said wealthy nations in 2009 are expected to need only 400,000 barrels a day more oil than this year, whereas demand from developing countries will increase by an estimated 1.1 million barrels, with most of that growth coming from China, the Middle East and India.
Jim Ritterbusch, president of the US-based energy consultancy Ritterbusch and Associates, said oil traders were "undoubtedly" pricing a recession into the market.
"It's just a question of severity," Ritterbusch said. "And given the downward movement in oil, it's beginning to look like a more severe recession than a lot of people had expected."
Investment bank JP Morgan cut its forecast for average oil prices next year to $74.75 a barrel, citing the weak economic outlook.
"The oil market is caught in the wake of four tsunamis," the US bank said. "A global recession, tighter credit, increased refining capacity and rising non-Opec supplies."
