iPath S&P GSCI Crude Oil Total Return ETN (NYSEARCA: OIL) declined 5.7 percent the past five sessions with shares down 25 percent the past year.
"It is now consensus that global oil markets will swing into surplus in 2018, and the burden of proof that this will not happen lies with the bulls,” Morgan Stanley analyst Ole Slorer said in a note.
The firm downgraded the energy industry to In-Line, saying its bear case has a 50 percent downside.
The exchange-traded fund, which includes Lennar Corp.
In contrast, the SPDR S&P Homebuilders ETF (NYSEARCA: XHB), which includes a wider array of companies like home furnishing retailers, slipped 0.36 percent Friday.