Oil & Gas Industry’s Recovery Coming a Lot Sooner Than Expected

Eric Nuttall, Senior Portfolio Manager at Ninepoint Partners, in a recent interview with the Financial Post had some good news for the beleaguered Oil & Gas Industry: “Oil demand will recover a lot faster than people believe.”

In a year where the market has been quite slow because of lockdowns, rail blockades, and other unforeseen circumstances, this is great to hear. But, how can it be? He says it has been proven true by the fact that in areas recovered from COVID-19 lockdowns, oil demand has rebounded. For example, in Japan, it is just 4% below where it was pre-COVID, and in China demand exceeds where it was pre-COVID.

Other factors that lead to Mr. Nutall’s prediction include the fact that when COVID Is all said and done some time in 2021/2022, there will be a lot of pent-up demand to meet once things return to normal (ex. for things like travel, or single-use vehicles as people avoid mass transit).

He also mentions that we need to consider the fact that soon the world will be adding non-OECD countries to the hydrocarbon consumption market as they begin to achieve the standard of living that we already experience in the developed world. They will not immediately jump to unproven green energy markets, they will want to go with tried and tested options available to them, which will drive the demand for oil up.

Finally, he focuses on the fact that Canada is where energy investors should pay close attention to as the world comes out of COVID-19 in 2021/2022. There are three main reasons for this. One, the country will be adding massive capacity through new pipelines – 1 Million barrels per day. Two, Canadian energy companies have proven low corporate decline rates. Finally, three, Canadian energy companies also have long-life reserves.

To see the full interview with Mr. Nutall in the Financial post, click here.