BNP sees growing challenges for oil sector, downgrades Subsea 7
** Exane BNP Paribas warns of the impact of peaking demand, increasing supply and the return of spare capacity from OPEC+ on the oil sector, as it cites the latest medium-term outlook from the International Energy Agency
** OPEC+ plans to gradually increase oil production by 2.2 million barrels per day from December through 2025, BNP says, while the IEA expects global demand for oil to reach its highest point in 2029
** "We see risks to the oil sector firmly skewed to the downside," the broker says
** BNP names Saipem SPMI.MI as its top pick, pointing to "more resilient" gas focused contract awards for the Italian group
** It downgrades Subsea 7 SUBC.OL to "neutral" from "outperform", saying the stock is fairly valued after the Norwegian energy services firm reported strong Q2 numbers and upgraded its outlook
** Subsea 7 trades at a 20% discount to its mid-cycle EV/EBITDA ratio vs a 50% discount for Saipem, the broker adds
** Shares in Subsea 7 fall around 5% and are among the worst performers on the pan-European STOXX 600 .STOXX
Reporting by Tilla Sjaavaag
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