Market Outlook: Canadian energy stocks keep outperforming even as crude struggles

Canadian energy producers continue to post strong returns despite a prolonged slump in crude prices, with exploration, production and infrastructure names showing resilience across the sector. Multi-year trends suggest deeper structural forces are supporting Canadian valuations even as global oil markets face uncertainty.

BNN Bloomberg spoke with Ryan Bushell, CEO and portfolio manager at Newhaven Asset Management, who says improved pipeline capacity, shifting capital flows and questions about U.S. shale supply are helping Canada’s energy sector defy weaker oil benchmarks.

Key Takeaways

• Canadian energy stocks continue to outperform crude, with some names posting gains of up to 80 per cent despite a sharp drop in WTI.
• Multi-year outperformance predates political shifts, pointing to structural factors such as improved differentials and reliable long-life resources.
• The Trans Mountain expansion has helped stabilize pricing for Canadian producers by narrowing transportation discounts.
• Investors are increasingly concerned about U.S. shale decline rates and inventory depth, prompting capital to rotate back to Canada.
• Growing natural gas export capacity could create a similar floor for Canadian gas prices in the coming years.

Read the full transcript below:

ANDREW: Our guest says he continues to marvel at the strength of Canadian energy stocks, especially exploration and production names, given the very weak performance of crude oil. It’s a really good topic. Let’s bring in Ryan Bushell, CEO and portfolio manager at Newhaven Asset Management. Great to see you. You have some pretty striking charts for us, Ryan. Thanks for joining us. We’ll have a look at those in a second, but let’s start with a five-year chart for XEG, the ETF that tracks energy producers. It is amazing how they’ve held in.

RYAN: Yeah, for sure. And thanks again for having me, Andy. The performance of Canadian energy stocks used to be such that when oil prices went down, we got hit even harder. That was because of differentials blowing out and our production in Canada being seen as high-cost relative to shorter-cycle U.S. shale. That trend seems to be reversing now. Today is an interesting day to talk about this, with the potential pipeline announcement coming out of Alberta. I think it’s a good time to examine Canadian energy stocks — both oil and gas — because the dynamics we’ve seen in oil over the last couple of years are poised to repeat in gas over the coming few years.

ANDREW: You’ve got a chart here showing a two-year total return for several of our energy names. Oil has dropped, but they’ve been strongly positive.

RYAN: Yeah, and you can see on the chart some of those names up 80 per cent. I didn’t just include the E&Ps — I included infrastructure names such as TC Energy, Enbridge and Pembina, which have also been strong over the period, just to show the whole Canadian energy ecosystem has performed positively. Typically, when oil prices go down, especially as significantly as they have, these stocks would get hit harder. People have chalked this year’s performance up to a change in government sentiment, especially after today’s expected announcement from Alberta. But actually, this trend goes back much further, which suggests there are larger dynamics at play.

ANDREW: And since the Trans Mountain expansion opened in May of last year, it’s been interesting to see that even though oil has dropped, our energy stocks have held up just fine — beating American counterparts.

RYAN: Yeah, and I don’t know if you’ve got my second chart up. That’s one of the major dynamics. There are really three factors at play here. First, Trans Mountain has put a floor under prices for Canadian producers by reducing the transportation differential to the Gulf Coast to about $10, after it had been as wide as $50 in the past decade. Second is the shift in government sentiment, which has become more positive. And third is what’s happening with U.S. shale. This chart shows U.S. producers are down over this period while Canadian producers are up. That suggests money could be rotating back to Canada — partly due to those first two reasons, but also due to concerns about the inventory depth of U.S. shale.

ANDREW: That’s the thing with shale — it runs down pretty quickly. And in economic terms, at least, we are blessed with the oilsands, which last for decades.

RYAN: Yeah, that’s right. And you’re finally seeing capital start to feel comfortable coming back to Canada. But we’re in a questionable crude environment. If Russia and Venezuela get to a point where more production comes online, that’s bearish for oil. So I’m not making a commodity bull case. But it does show that Canadian oil stocks — which used to have higher beta to crude, especially on the downside — are now showing less beta. And the cash-flow discipline imposed on them over the past decade has put them in good standing with international investors, and we’re seeing dollars return. On top of that, with the AI trade dominating U.S. indexes, energy is now only about three per cent of the S&P 500. If that rebalances at all, Canada should benefit.

The last thing I wanted to mention is natural gas. I think similar dynamics could play out there — not necessarily a bullish commodity story, but a floor under Canadian gas prices as export capacity comes online. LNG Canada is now online, and then there’s potential phase two, plus Woodfibre, Cedar LNG and other projects.

ANDREW: We have seen something of a rally in U.S. natural gas lately. Maybe we can put up a five-year chart. But it’s been disappointing, hasn’t it? This year Alberta natural gas was, in theory, going negative at times.

RYAN: Yeah. And in the chart I showed earlier, you can see Tourmaline was the worst performer among the major Canadian oil companies. That speaks to the Western Canadian dynamics and those really soft gas prices, which remain landlocked because we still don’t have enough egress — transportation and export capacity — out of Canada. That is changing rapidly. So that’s where I think you could see a similar dynamic in Tourmaline over the next three or four years, or Arc Resources or other Canadian gas producers, where the commodity doesn’t necessarily perform, but the stocks do because Canadian prices improve.

ANDREW: Finally — we’ve got less than a minute — but this is a tricky one for Mr. Carney, isn’t it? Placating B.C., but expressing some support for a pipeline to the northern coast.

RYAN: Yeah, and I think that’ll be difficult to get done, even if there is a big announcement today. I wouldn’t be trading on that news. But it will be interesting to see what actually gets done. Right now, there are some pretty attractive brownfield expansion opportunities. Trans Mountain can be expanded further and sooner than many expected. Enbridge just had an open season on about 100,000 barrels a day going to the Gulf, which was well subscribed, and could add another quarter million barrels a day going forward. So there are smaller, incremental expansions that could tide us over. I don’t think we necessarily need a major export pipeline in the next three or four years, but it’s good to see we’re finally thinking ahead.

ANDREW: Ryan, thanks very much indeed. Ryan Bushell, CEO and portfolio manager at Newhaven Asset Management.

—

This BNN Bloomberg summary and transcript of the Nov. 27, 2025 interview with Ryan Bushell are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.