(Reuters) - Canada’s biggest bank, RBC, forecast more pressure for domestic oil storage and pipeline businesses on Tuesday after Prime Minister Justin Trudeau’s Liberals retained power but were stripped to a minority government that will need the support of a smaller left-leaning party to govern.
While RBC analysts expected the government to move ahead with Trans Mountain oil pipeline expansion plans, they said leftist groups may make moves against the project - the price of their support for the Trudeau minority government.
One winner, on the other hand, could be renewable power ventures that are likely to be supported by a continuation of policies including the phase-out of coal generation and an escalating carbon tax.
“We see the election result itself as likely sustaining the negative sentiment towards the pipeline and midstream sector,” RBC Capital Markets said in a note issued shortly after initial results showed the Liberals had won or were leading in 156 out of parliament’s 338 seats.
The oil industry’s top lobbying group has blamed Trudeau’s policies for throttling investment in the sector, and some global energy companies have shed assets in the oil sands region of Alberta, the country’s main oil-producing province.
RBC, however, added that it did not expect TC Energy Corp’s proposed Keystone XL oil pipeline to be affected by the election results.
Shortly before the polls closed, Goldman Sachs cut its price targets on energy companies - Suncor Energy, Cenovus Energy, Imperial Oil, Canadian Natural Resources and MEG Energy Corp. The moves came ahead of third-quarter corporate results and as the U.S. investment bank wound back its growth forecast in U.S. shale output and reduced its outlook for growth in global oil demand in 2020.
Reporting by Tanvi Mehta in Bengaluru; Editing by Patrick Graham and Sherry Jacob-Phillips