The S&P/TSX Capped Energy Index is enjoying a rare 49 per cent rally in the current quarter, but remarkably it’s still down 33 per cent for the year, highlighting the depths it had plumbed as the pandemic battered the market.
Energy now makes up about a mere 11 per cent of the TSX Composite index, a far cry from the approximately 20 per cent it accounted for in 2018. Canada’s domestic institutional investors also appear to have lost their appetite in domestic oil and gas equities. Instead, U.S.-domiciled investors are now the oilpatch’s largest institutional shareholders.
“However, we can not help but think that all major industry groups will be opposed to this level of government intervention and that some sort of other solution will be found.” “Market confidence is also coming by progress in U.S. stimulus package negotiations, as the discussed level of a $908bn deal Is sure to send oil demand levels higher if confirmed,” Bjornar Tonhaugen, head of oil markets at Rystad Energy said in a note.