Bloomberg News

Lukoil, Rosneft Decline After Renaissance Downgrades Stocks

May 05, 2009

OAO Lukoil and OAO Rosneft, Russia’s biggest oil producers, declined after Renaissance Capital cut its recommendation on the stocks.

The brokerage downgraded Lukoil and Rosneft to “hold” from “buy,” saying it expects a “temporary pause” in gains in the industry because oil companies will operate in “survival mode” as long as oil is below $60 a barrel. The Micex Oil & Gas Index has climbed 80 percent from this year’s low in Jan. 20, compared with a 40 percent advance in oil in the same period.

“It may take longer than previously thought for the oil price to recover,” Renaissance Capital analysts Alexander Burgansky and Irina Elinevskaya in Moscow wrote in a report today. The analysts wrote they expect a temporary pause in the sector rally.

Lukoil, Russia’s second-biggest oil producer, declined 1.5 percent to 1,525.80 rubles at 1:28 p.m. in Moscow. Rosneft, the nation’s largest, slipped 0.7 percent to 180.40 rubles, its biggest decline in a week.

OAO Tatneft, the crude producer in the Tatarstan region, fell 1.5 percent to 103.45 rubles.

Crude futures today slipped 0.2 percent to $54.35 in after- hours trading on the New York Mercantile Exchange.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net;

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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