Upgrade In a research report previewing second-quarter earnings season for the Canadian energy sector, Desjardins Securities Energy Research team raised its oil price forecasts, which it expects will provide “wind in the sails” for most companies.
“While we have been cautiously optimistic on crude prices for the better part of a year, we certainly did not expect OPEC+ to stay the course as well as it has — and, to be frank, this has led to a much higher crude price than we believe is fundamentally supportable, at least in the near term,” said analysts Justin Bouchard and Chris MacCulloch.
“That said, the new deal that OPEC+ hammered out was a positive development from our perspective, as it provides the market with visibility on the gradual return of barrels to the market. But in recent days, we have also seen the market’s reaction to the prospect of a Delta-variant-induced fourth wave of COVID-19 infections. In any event, we have moved up our WTI price forecast to US$75 per barrel for the balance of 2021 and to US$70 per barrel for 2022.”
The firm thinks the oil price recovery “remains on track, despite renewed headwinds from the rise of COVID-19 variants and noise surrounding the recent OPEC+ supply agreement.” The more constructive crude outlook led the analysts to raise their target prices for most stocks in their coverage universe.
The analysts’ target changes for large-cap stocks were:
- Cenovus Energy Inc. (“buy”) to $16 from $14. Average: $15.17.