2Q26 Mark-to-Market: Pin the Tail on the Donkey

Research evidence excerpt

2Q26 Mark-to-Market: Pin the Tail on the Donkey

owered our 2026 assumption to

would not last. CAD$2.16/Mcf from CAD$2.23.

Now What. The SoH is theoretically open and tankers are tentatively beginning to exit Revised company estimates. We have revised

the Persian Gulf. Shipments are still well below normal, and it will take some time for company estimates to reflect our revised

the ships to reach end use markets. That said, the global demand outlook is uncertain. assumptions (see separate comment). CFPS estimates

Petroleum product crack spreads suggest that the market is tight and that oil prices may for Canadian large-cap E&Ps decline 6.5% in 2026

be too low; however, China has dramatically cut crude oil imports and refining runs and and increase 5.1% in 2027. Among U.S. large-cap

the market will be watching closely to see if they recover. This leads us to conclude that E&Ps, CFPS decreases 7.6% in 2026 and rises 1.7%

oil may be range bound in the near-term. in 2027. Within our SMID-cap coverage, Canadian

Gas Fades Again. Natural gas can't seem to catch a break. The loss of Qatar LNG CFPS estimates fall 7.8% in 2026 and increase 5.5%

exports was expected to support higher global and North American prices but like oil, in 2027, while U.S. SMID CFPS declines 5.3% in 2026

the rally fizzled, and the market is now turning its attention to relatively high storage and rises 5.9% in 2027. EPS estimates for our U.S.

levels in North America. We would continue to avoid gas for now. refiner coverage decline 11.1% in 2026 and 15.2% in

Buy or Sell? We estimate that the North American oil and gas group reflects an implied 2027, while CFPS estimates decrease 9.1% and 7.0%,

WTI price of ~US$66/bbl while natural gas leveraged companies reflect a Henry Hub respectively.