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Investing.com -- JPMorgan has laid out its top oil stock calls into the third quarter earnings, recommending long positions in Repsol and Eni, and short on Equinor.
The bank’s analysts point to a backdrop of looming oversupply, OPEC+ quota risks, and a still-tight diesel market as critical to sector performance.
Diesel is the main area of strength, with cracks up 50% quarter-on-quarter, driving refining margins 40% higher, a dynamic JPMorgan sees as key for stock selection. Analysts said they see diesel-led refining as a “key oil price hedge and it also represents the only significant sequential pricing delta to 3Q.”
JPMorgan reiterated its Positive Catalyst Watch on Repsol, citing the group’s “superior diesel enabled 3Q/2H EPS risk/reward.”
The team forecasts net operating income of around €830 million versus a Bloomberg consensus in the mid-to-low €700 million range, with cash flow from operations (CFFO) at €1.7 billion.
It expects full-year cash flow from operations (CFFO) of €6.2 billion, slightly ahead of company guidance, and notes that the valuation remains attractive at a forward price-to-earnings (P/E) of 6.1x and an 11.5% cash yield, including a €700 million buyback.
Eni is also on Positive Catalyst Watch, with JPMorgan pointing to strong operational momentum since the first half. The bank forecasts adjusted EBIT of €1.9 billion and CFFO ex-working capital of €2.8 billion, which would cover nearly 80% of the company’s full-year target by September.
Analysts also see scope for a share buyback (SBB) increase from €1.5 billion to €1.6-1.7 billion, taking the cash yield to 10.7%.
“We forecast potential for a SBB increase … taking cash yield to 10.7% with a firm floor which we find attractive,” they wrote.
On the flip side, JPMorgan remains cautious on Equinor, warning that its re-gearing trajectory heightens the risk of outsized distribution cuts beyond 2025.
The analysts project operating profit of $6.8 billion and CFFO pre-working capital of $5.7 billion for the quarter, but model 2026 shareholder returns falling 40% year-on-year to $6 billion.
They said their Underweight rating reflects a view that “this is insufficiently priced into the shares at a sub-7% 2026 FCF yield”.
Among the supermajors, Shell remains the preferred name, with the bank expecting it to maintain a $3.5 billion share buyback in the third quarter.
TotalEnergies and BP are seen as less differentiated near term, with investor focus likely to fall on deleveraging progress and portfolio updates, respectively.