The Early Stages of a Constructive Energy Cycle

By Nurit Altman (Host) with Michael Tran
Published February 2, 2022 | 13 min listen

2021 marked a stark reversal of fortunes in the energy sector, with improving supply demand fundamentals, more resilient business models, and robust oil prices bolstering energy companies and setting the stage for continued growth. Many believe these are only these early stages of a constructive energy cycle.

On this episode of The Real Pulse, Michael Tran, Managing Director, Global Energy Strategy and Digital Intelligence Strategy at RBC Capital Markets, sits down with Nurit Altman to share his views on where oil prices will go in 2022 and the implications for the Alberta real estate market.


Key takeaways


We are in the early stages of a constructive oil market cycle. 2022 will be the first year in a decade that we are seeing demand strength alongside supply side tightness.


There is a three step process to structurally higher oil prices, including the reduction of the storage backlog that formed during the early days of pandemic, the reduction of OPEC's spare capacity from its historical high, and the call on U.S. shale production rising to protect the market from overheating. These three steps moving in sequential order is really what's providing the framework of a structurally stronger oil market.


There's an additional geopolitical risk premium that's pricing back into the market to couple with inflation and the strong oil market backdrop, all serving as tailwinds for oil prices that will remain quite strong.


Energy policy presents a potential downside risk for energy prices. We believe that the U.S. government will be looking to provide some reprieve to U.S. consumers in the form of lower oil prices ahead of the election.


Over the near term the fundamental oil framework is the strongest set up in over a decade. This very strong oil market cycle will enable Calgary and Alberta to continue to flourish over the course of the next several years.


EnergyOilOutlookReal Estate

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