A strong oil outlook on stronger-than-expected demand this 12 months ought to present a “sizzling summer season” for power shares, in keeping with Morgan Stanley. The funding financial institution has upgraded the power sector to “engaging” as crude oil demand forecasts have improved on better-than-expected progress within the main economies. Morgan Stanley’s high picks to play the oil rally are BP , TotalEnergies and Repsol . The financial institution expects demand progress of 1.5 million barrels per day this 12 months, barely above the historic pattern of as much as 1.4 million barrels per day. Greater demand is colliding with constrained provide as OPEC+ cuts manufacturing and issues develop about Russian manufacturing as Ukraine repeatedly strikes refineries. “Taken collectively, we count on an under-supplied summer season, with world oil inventories drawing in 2Q and 3Q,” Martijn Rats, commodity strategist at Morgan Stanley, instructed shoppers in a observe Thursday. Sturdy demand mixed with geopolitical danger ought to help Brent costs of $94 a barrel by the tip of the summer season, in keeping with Rats and his colleagues. BP YTD mountain BP shares 12 months thus far BP stands out with a compelling distribution yield of almost 11%, in keeping with Morgan Stanley analysts. The financial institution has a worth goal for BP of $49.90, which means about 26% upside from Thursday’s shut of $39.65. TotalEnergies provides stronger progress, extra constant returns and decrease earnings volatility than its friends, in keeping with the financial institution’s analysts. Morgan Stanley’s worth goal for TotalEnergies is $85.70, indicating 17% upside from the earlier shut of $72.95. Repsol ought to present free money circulation yield of 14% via 2025, which is among the many highest within the sector, in keeping with the analysts. This could translate into shareholder distributions of about 14% given administration’s willingness to reward buyers, in keeping with the financial institution. Morgan Stanley’s worth goal for Repsol is nineteen.2 euros, or $20.44, implying 23% upside.