UBS sees value in BG/Royal Dutch Shell, Tullow, Premier Oil

Going into 2016 - and despite oil prices being at around seven-year lows - UBS said it was the most optimistic in nearly two years and saw value in the shares of several companies in the space.

"Although oil prices currently look unsustainably low for some operators, we can see a correction under way. Before the end of 2016, we think the oil market may well be balanced and prices could be adjusting significantly higher as a result."

As for natural gas markets, the Swiss broker said they were comfortably oversupplied and that prices needed to remain competitive in order to encourage consumption.

Nonetheless, "evidence suggests that demand does exist," the broker added.

There is 'value' to be found in integrated oil companies, as well as in exploration and production outfits, "although we acknowledge a balancing act between value and funding", analyst John Rigby said in a research note sent to clients.

Withing the former, Rigby said he prefered BG/Royal Dutch Shell while his top picks in the E&P space were Tullow Oil and Det Norske. However, the same analyst said he was cautious on the funding risks present in Premier Oil and Enquest.

Oil field services on the other hand will struggle to 'outperform', he added. His top-picks in that segment in that sector were Petrofac and Tenaris, even while remaining cautious on Seadrill and Vallourec.