Despite crude prices hitting a four-year low to close out a volatile year, one of Canada’s most prominent energy bulls is forecasting a significant market tightening, arguing that the era of aggressive American production growth has ended.
Speaking to BNN Bloomberg, Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners, outlined a bullish case for 2026, predicated on a structural supply mismatch and rising global demand. While acknowledging that the market is currently “temporarily oversupplied” due to inventory builds and OPEC policy shifts, Nuttall argued that the underlying fundamentals point toward a looming deficit.
Central to Nuttall’s thesis is the stagnation of United States shale production, which has historically been the primary engine of global supply growth.
“The twilight of US shale is real,” Nuttall said. “US shale production has barely grown this year; it’s been flat for the past three months. We see no growth from US shale.”
Nuttall emphasized the magnitude of this shift, noting that US shale accounted for over 100 percent of total non-OPEC supply growth over the past decade. He forecasts that by 2026, the industry will see the cessation of aggregate supply growth from both OPEC and non-OPEC sources.
“We see a structural mismatch beginning at some time in 2026,” Nuttall said. “The world is going to wake up and realize we need exploration, we need offshore drilling.” He added that current price levels are insufficient to incentivize the necessary production, stating, “That does not work at 50s, it doesn’t work in the 60s, and I don’t even think it works in the 70s.”
Capital Flowing North
Nuttall also highlighted a resurgence of interest in the Canadian energy sector, marked by significant M&A activity, including Cenovus Energy’s acquisition of MEG Energy. He views the consolidation as inevitable given the quality of the assets and the discounted valuations of Canadian producers compared to their American peers.
“We see US money finally coming into Canada,” Nuttall observed, noting that investors are becoming aware of the inventory challenges facing US shale companies. This capital rotation is benefiting major Canadian players like Canadian Natural Resources and Suncor, as well as narrowing the valuation gap for companies like Cenovus.
Natural Gas as a “Foundational Fuel”
Beyond crude, the Ninepoint manager expressed strong optimism regarding the natural gas market, driven by increasing LNG export capacity and surging demand for power generation. He pointed to the expansion of exports from Canada and the US, as well as rising domestic power needs, particularly in markets like Texas.
“Natural gas in 2025 has really gone from being a transition fuel to now a foundational fuel,” Nuttall stated, citing a 5.5 percent year-over-year increase in power demand in Texas. He anticipates that Canadian natural gas discounts will narrow significantly as LNG Canada ramps up exports, predicting a “very, very healthy level” for realized prices.
Despite the bearish sentiment currently weighing on oil prices, Nuttall’s fund has outperformed the commodity, ending November up 24 percent year-to-date. Looking forward, he believes the worst of the sell-off is past.
“One year from now, oil could be in the high 60s to 70s,” Nuttall concluded. “2026, I think, is going to be a very, very good year for oil.”