All the news is upbeat as NG follows oil and drilling results for qec and others are imminent

Goldman Sachs Says Energy Stocks Are a `Buy' After Retreat

By Fabio Alves

July 21 (Bloomberg) -- Investors should buy energy stocks, which fell the most last week in six months, as oil prices will rebound, Goldman Sachs Group Inc. said.

``At $129, crude oil trades at the same price as on May 20th, but energy shares have dropped 14 percent,'' Goldman Sachs strategists led by David Kostin wrote in a note to clients today. ``Now is a good entry point given that our commodities research team has a $149-a-barrel year-end target'' for oil.

Oil prices plunged 11 percent last week, the biggest weekly drop in more than three years, on concern a slower global economy will curb demand for fuel and on reduced tension between the U.S. and Iran. A gauge for energy stocks in the Standard & Poor's 500 Index tumbled 5.6 percent last week.

``Oil demand has become a function of available supply and is not an independent variable,'' wrote Goldman energy analysts, who reiterated an ``overweight'' rating on the industry. ``Due to lack of sufficient supply to meet desired global oil demand growth, prices are high and rising in order to force demand rationing.''

Integrated oil companies recommended by Goldman Sachs analysts include Hess Corp., ConocoPhillips, Petroleo Brasileiro SA, Chevron Corp. and Murphy Oil Corp.

Goldman Sachs also advised investors to take advantage of price declines to buy stocks of exploration and production companies, such as EOG Resources Inc., Devon Energy Corp., Ultra Petroleum Corp. and Suncor Energy Inc.

To contact the reporter on this story: Fabio Alves in New York at falves3@bloomberg.net

Last Updated: July 21, 2008 10:37 EDT