Thanks to a shiny new pipeline, Canadian crude is now flowing freely out of the oil patch. For some reason, so is investor money.have seen heavy outflows in recent months, suggesting the sector remains shrouded in negative sentiment. Which is curious, considering all of the good news spilling out of the energy sector these days.expansion is the latest game changer. For the first time in many years, there is spare pipeline capacity out of the Alberta oil sands.
After years of delays and cost overruns, the $34-billion Trans Mountain pipeline expansion project finally opens Evidently, lots of investors don’t see the appeal. They have pulled a net of $259-million out of energy exchange-traded funds so far this year, which is on track to surpass last year’s outflow of $505-million, according to data from National Bank Financial.
Meanwhile, an inadequate pipeline network saw producers struggle to get their product to market, forcing them to resort to making shipments by rail. In 2018, a barrel of Western Canadian Select sunk to as low as US$13.46 a barrel. Foreign investors withdrew from Canadian energy in those years, and they’ve been slow to return ever since.
Institutional investors saw well in advance the opportunity that the completion of TMX presented, said David Sherlock, chief investment officer at SAGE Connected Investing in Calgary. The energy sector is expected to contribute about 27 per cent of the total TSX dividend pool this year, despite accounting for just 19 per cent of the index by size, according to data from Scotiabank.