Energy markets have a way of keeping you humble. You can spend weeks preparing an outlook, and then a weather event or a geopolitical headline reminds you that commodities don’t follow a script.
For investors, that uncertainty can seem daunting. But in commodity markets, it pays to stay grounded in fundamentals by managing risk thoughtfully and making long-term decisions without chasing trends. This philosophy is why we have entered 2026 with cautious optimism, despite a noisy January.
What 2025 Told Us
The pricing environment over the year was challenging, with West Texas Intermediate (WTI) declining throughout. With Invico Capital Corporation’s primary growth strategy being through acquisition, the lower-priced environment in 2025 allowed us to make a meaningful oil-weighted transaction in the Powder River Basin, with a strong potential for future gains.
Natural gas, on the other hand, was more nuanced. On the U.S. side, NYMEX (a reference for U.S. natural gas pricing) improved in 2025 versus 2024, which was supported by increased demand from LNG exports and power consumption. In Canada, AECO (the key Canadian natural gas pricing benchmark) had a rough summer, largely due to maintenance on NGTL (Nova Gas Transmission Ltd., a major natural gas pipeline network in Western Canada), before winter demand helped lift prices.
Staying grounded in the fundamentals is key in an energy space that often becomes clouded with headline noise. This proved particularly important in 2025, when active managers, such as Invico, were able to capitalize on short-term lifts in the futures pricing (often caused by geopolitical noise and uncertainty) to secure profitable hedges, before the prevailing fundamentals brought pricing back down.
Oil in 2026: More Range-Bound & Fundamentals-Driven
Looking ahead, our view is that oil prices will remain relatively soft; however, we are moving past the emotional market swings seen recently and returning to a more fundamental, supply-and-demand-driven pricing environment.
There are a few factors that justify this belief. Firstly, there is a continued surplus in the global market (~2 million barrels per day), which is likely to keep prices soft, but with OPEC+ (Organization of the Petroleum Exporting Countries) postponing previously-planned production increases for Q1 2026, we anticipate prices stabilizing in the range of USD$57 to USD$62.
Secondly, geopolitical headlines around Venezuela and the Middle East were present in early 2026; however, oil did not spike meaningfully in response, which supports the view that fundamentals are reasserting themselves. With Venezuela in particular, we don’t expect a significant shift in supply in the short term. Even if volumes return, expect a slow trickle, not a sudden flood. And while Venezuelan crude quality overlaps with Canadian oil, the refinery pathways differ (Gulf Coast for Venezuela versus the Midwest for Canada), so displacement isn’t perfectly direct.
This stability matters.
One of the biggest barriers to getting a deal done in the energy space is the bid-ask spread, or the gap between the buyer’s and seller’s value expectations. When a buyer expects oil prices to remain at USD$60, but a seller predicts prices closer to USD$80, reaching a deal can become difficult. Increased stability means everyone is singing from the same song sheet and can help facilitate a transaction.
Natural Gas in 2026: the Volatility Story
If oil is your flannel-wearing, philosophy-major boyfriend (i.e., easygoing and mostly predictable), then gas is the guitar-playing, rockstar boyfriend (i.e., where you’re never quite sure what you’re going to get).
On the U.S. side, we came into 2026 with cautious optimism: demand improved in 2025 versus 2024, and LNG exports reached record levels. However, with storage levels remaining above the five-year average, any bullishness remained tempered. But as often happens in winter, a weather event caused a massive draw and subsequent surge in price at the end of January. This kind of move is precisely why gas is hard to track – but why it can also create opportunities for active managers like Invico.
In Canada, gas prices haven’t been moving in lockstep with those in the U.S. the way they used to. LNG Canada has been a stabilizing factor for demand, but with storage still elevated, pricing remains susceptible to demand shifts.
One unavoidable wildcard with gas is AI-related demand; forecasts range from zero impact to an increase of 8 Bcf/d (billion cubic feet per day, a standard unit of measurement for natural gas production volumes). Regardless of how it turns out, AI demand certainly paints a more positive future for gas pricing.
In Summary
Our outlook for 2026 can be summarized simply: oil stability and gas volatility can both create opportunity, but you must stay disciplined, hedge well, and keep your decisions anchored in the fundamentals.
To learn more about Invico Capital Corporation and our energy investment philosophy, visit https://invicocapital.com/energy-capital-solution/.
By Sara Pettigrew, Vice President, Energy Investments, Invico Capital Corporation