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Pro Analysis

Buy this 'high-beta' oil play: Morgan Stanley

Don Robicheaux, safety coordinator for Marathon, stands in front of a crude unit, part of Marathon's estimated $3.2 billion expansion in Garyville, La.
Cheryl Gerber | AP
Don Robicheaux, safety coordinator for Marathon, stands in front of a crude unit, part of Marathon's estimated $3.2 billion expansion in Garyville, La.

Investors should buy Marathon Oil as a high-beta play on rising oil prices, according to Morgan Stanley, which upgraded the shares of the energy company to overweight from equal weight.

"Recent crude supply disruptions have accelerated the market re-balancing. While the return of outage barrels presents second half 2016 oil price risks, we believe the bridge to a materially high crude price on fundamentals is now shorter," Morgan Stanley's Evan Calio wrote in a note to clients Monday.

The analyst also likes Marathon's increased position in an emerging shale region of Oklahoma — called STACK — that is proving to be economical at lower oil prices than other fields.