{"id":411218,"date":"2026-01-15T15:53:09","date_gmt":"2026-01-15T15:53:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/411218\/"},"modified":"2026-01-15T15:53:09","modified_gmt":"2026-01-15T15:53:09","slug":"suncor-named-top-pick-by-cibc-and-rbc","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/411218\/","title":{"rendered":"Suncor named top pick by CIBC and RBC"},"content":{"rendered":"\n

It\u2019s been a volatile start to 2026 for Canadian oil stocks, with uncertainty over revitalized Venezuelan production at one point prompting Prime Minister Mark Carney to give reassurance that the industry will remain competitive<\/a>. <\/p>\n

For investors, it was a lot to digest. U.S. President Donald Trump has declared his government will run Venezuela’s oil industry \u201cuntil such time as we can do a safe, proper and judicious transition.\u201d Venezuela has the world\u2019s largest oil reserves, and produces a heavy grade of crude similar to Western Canadian Select (WCS). However, much of the country\u2019s infrastructure is reportedly crumbling<\/a>, and the CEOs of America\u2019s oil giants don\u2019t sound overly keen to pony up big bucks to fix this<\/a>. <\/p>\n

On the Toronto Stock Exchange, shares of Canadian producers fell<\/a>. Some investors bought the dip<\/a>. <\/p>\n

On Wednesday, oil prices rose to a two-month peak<\/a> as traders priced in risk from another key region. Iran is home to the world\u2019s third-largest reserves, and strategically located along the Strait of Hormuz, arguably the most important energy transit chokepoint in the world. On Thursday, crude sank after Trump indicated he will hold off on intervening in Iran<\/a>.<\/p>\n

The iShares S&P\/TSX Capped Energy Index ETF remains near its 52-week high. The basket of Canadian oil and gas stocks fell about 1.5 per cent on Thursday, after having gained nearly nine per cent in the prior five trading days.<\/p>\n

Looking back, RBC Capital Markets analyst Greg Pardy puts it like this.<\/p>\n

\u201cJanuary arrived like a runaway freight train,\u201d he wrote in a research report earlier this week. \u201cThat said, inspection of fourth-quarter estimates across our coverage would generally point towards a more placid landscape, with few big surprises in store.\u201d<\/p>\n

Imperial Oil (IMO.TO<\/a>)(IMO<\/a>) is scheduled to be first among Canada\u2019s top producers to report fourth-quarter financial results. The company is due to report prior to the opening bell on Jan. 30.<\/p>\n

\u201cWe estimate that Canada\u2019s majors \u2014 Canadian Natural Resources, Suncor Energy, Cenovus Energy and Imperial Oil \u2014 saw their free funds flow (before dividends and working capital movements) generation fall almost one-third sequentially ($2.2 billion) to $4.8 billion in the fourth quarter, in large part due to soft oil prices,\u201d Pardy wrote.<\/p>\n

RBC Capital Markets estimates U.S. benchmark crude (CL=F)<\/a> averaged US$59.21 in the fourth quarter, down US$5.82 or nine per cent sequentially.<\/p>\n

Pardy\u2019s top pick among Canadian integrated producers is Suncor Energy (SU.TO<\/a>)(SU<\/a>). Among the non-integrated senior producers, he prefers Canadian Natural Resources (CNQ.TO<\/a>)(CNQ<\/a>).<\/p>\n

Suncor is also a favourite at CIBC Capital Markets. Its oil and gas analyst, Dennis Fong, ranks the company among his top picks for 2026, next to Kelt Exploration (KEL.TO<\/a>) and Tamarack Valley Energy (TVE.TO<\/a>).<\/p>\n

WCS, Canada\u2019s main crude benchmark, is priced at a discount to West Texas Intermediate (WTI). CIBC Capital Markets estimates this price gap averaged US$12.07 in the fourth quarter.<\/p>\n

\u201cWe expect the WCS-WTI basis could widen seasonally but remain at about US$14.25 per barrel for 2026,\u201d Fong and his team wrote in research published on Monday. \u201cAny resurgence in supply from the nation could drive a wider WCS-WTI basis over the longer term.\u201d<\/p>\n

For reference, WCS-WTI differential exploded to a discount of over US$50 per barrel in October 2018. At the time, Alberta was stuck with a massive glut of oil due to scarce pipeline capacity and refinery maintenance.<\/p>\n

Craig Basinger, chief market strategist at Purpose Investments, says it\u2019s premature to take today\u2019s oil headlines at face value.<\/p>\n

\u201cVenezuelan developments add a smidge more risk but at this point, we wouldn\u2019t overreact and would view equity weakness as an opportunity,\u201d he wrote in a new analysis this week.<\/p>\n

\u201cIn the meantime, we believe in patiently and comfortably holding pre-existing positions, clipping dividends, and hoping the market overreacts.\u201d<\/p>\n

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist<\/a>.<\/p>\n