Eric Nuttall says its ‘not a bullish day’ for oil, but optimism persists for energy stocks

One prominent energy investor says he is bullish on oil stocks, but less so on prices for the key commodity, which faces a double impact from U.S. tariffs and a surprise hike from Organization of the Petroleum Exporting Countries (OPEC+).

Oil fell the furthest since 2023 on Thursday morning, with Bloomberg News reporting that West Texas Intermediate futures fell as much as 7.3 per cent and international benchmark crude prices moved toward US$70 per barrel. On Wednesday, U.S. President Donald Trump announced sweeping reciprocal tariffs casting doubts on the global economic outlook. However, Trump refrained from enacting measures that would reduce flows from Canada and Mexico, according to Bloomberg News.

OPEC+ also indicated it would add more than 400,000 barrels a day of oil supply back into the market beginning next month, Bloomberg News reported the move was about three times higher than what the group had previously stated.

“This is a scenario where OPEC+ sees stronger demand. Now, obviously we can challenge that with what happened yesterday with, you’ve got economists cutting U.S. GDP (gross domestic product) expectations by one to two per cent, so there’s likely going to be a hit to demand growth this year. I think that’s very reasonable,” Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, said in an interview with BNN Bloomberg Thursday.

“So as bullish as I am on energy stocks, from an oil perspective this is not a bullish day.”

Nuttall said he has “long argued” Canadian energy would be largely exempt from U.S. tariffs.

“It’d be massively inflationary…you’ve got PADD 2 refineries with the Chicago area importing in three million barrels per day of Canadian heavy via pipelines. We’ve said this for three months (until) it feels like until we’ve been blue in the face,” he said.

“So we’re vindicated from that at least. It would have been epic stupidity to tariff a product, which is critically essential, is the most visible cost of living and for which you have no substitution.”

Given the current circumstances he thinks oil prices will average around US$70 per barrel during the year.

He says that while there are opportunities for energy investors, he is not “suggesting people go out and deploy all of their cash if they’re sitting on any” and recommends investors wait for things to settle down.

However, given the current price of oil, Nuttall said there are opportunities in the sector, highlighting around half of his fund is now invested in natural gas.

“We’re very bullish in natural gas now and going forward, especially in Canada as LNG should be starting to ramp up in the next couple of months. So there’s opportunities, but today’s development with tariffs for sure (is) negative (for) oil,” he said.

“We’re all guessing in terms of what the quantum is going to be and so that’s going to be a lingering uncertainty that the market has to deal with. So you want to be pragmatic…but we’re bullish in energy stocks because we know just how strong these business models are. We know how strong the balance sheets are. We know how strong the inventory depth is.”

Nuttall added that he thinks U.S. shale companies will be “forced to come to Canada over the next year to replace their depleted inventory.”