Okay listen up here bros. First of all, no I am not trying to pump my “bags”. Even if all of you brokies liquidated everything and went into CNQ on Monday at open, it wouldn’t move it a needle. With that being said, I know you are all busy chasing shiny metals right now but going into 2026, I believe that energy equities could outperform. Oil has pretty much been eating shit all year and is currently sitting at around $55 (crude). Yes, an entire barrel of oil is now cheaper than an ounce of silver. Read that again. Can it go lower? Sure. Is it sustainable? No. I think in hindsight, this will have been obvious. Sometimes, things are cheap enough.
Why am I bullish on oil?
Well, I listen to and read a lot of what old and rich boomers have to say when I am bored and a lot of them seem to be bullish on it. I will try to keep this short and concise. In no particular order :
1. The massive "supply glut" is overstated and demand is not as weak as forecasted either. Even the IEA which have been historically bearish recently moved their goalpost on peak oil demand from 2030 to 2050 (not that IEA has any real credibility. They have been wrong on their oil demand forecasts for like 17 years in a row).
2. Most of the world's oil supply growth since the shale revolution came from US shale. There is real evidence that suggest that shale production has peaked (or is close). Their best assets are facing major depletion and at current oil prices, contrary to what the Mango man wants, their production will not be growing.
3. XLE makes up less than 3% of SPY. Just going back to the historical average of 6\~8% would imply massive gains for the equities. The bullish case is not necessairly dependent on crude hitting $100.
4. Seasonality. Crude typically has strong seasonality in Q1.
5. Any geopolitical risks are just a bonus at this point.
One of my favorite boomers to listen to, Rick Rule, says that you don't need to go far down the quality trail when it comes to oil equities. He thinks XOM is selling at 60% of NPV, meaning at 40% discount. I'm personally all in on CNQ which is a Canadian oil sands giant. The Canadian O&G stocks trade at an even further discount to the US peers because of our political incompetence but Carney is a smart man and understands how important our oil and gas sector is to our economy and I'm betting that he will enable them. He has already reversed some of the Trudeau era policies and I think this is why they have been outperforming the US O&G names. I'm also Canadian myself and there are tax advantages for holding TSX stocks.
Here’s some random tickers to consider since a rising tide lifts all boats.
XOM / CVX / COP / CNQ / SU / OXY / DVN
Anyways, that's it for now. I'm off to play some poker. See you degens on Monday.
