MS keeps cautious view on energy majors, sees buybacks increasingly fragile

** Morgan Stanley is still cautious on energy, saying the short-term outlook for the sector remains heavily dependent on commodity prices

** "(...) it is worth treading cautiously at this stage, as the oil market in particular appears well supplied in coming quarters," it says

** It adds that current share buybacks are increasingly fragile to sustain and it sees downside risks to consensus shareholder remuneration expectations next year

** In such setup, it says it favors defensive and high-quality names, such as "overweight"-rated Shell SHEL and TotalEnergies TTE

** MS says Shell is "particularly well positioned to navigate the coming period of commodity price uncertainty"

** It upgrades BP BP. to "equal-weight" from "underweight" as it says the proposed sale of Castrol improves the outlook for net debt and puts the company's buyback program "on a better footing"

** It cuts Equinor EQNR to "underweight" from "equal-weight" seeing strong pressure for the company's financials should the broker's brent price forecast of $60/bbl materialise, plus little to no room for buybacks