Canadian energy stocks break to 10-yr highs despite numerous headwinds and negative sentiment

It’s felt like a bit of a rocky year in 2025 for Canadian energy. There have been numerous headlines that have driven (often negative) volatility in the sector, including:

• uncertainty over the Canadian election and resulting policies
• relentless tariff drama with the United States
• uncertainty over the Canadian dollar, which at one point touched 22 year lows before rebounding sharply
• OPEC accelerating the return of previously curtailed production into the global markets, causing oil prices to selloff
• persistently weak Canadian natural gas prices, with weakness spreading to US markets recently as well
• global trade tensions with the Trump administration pursuing its tariff strategy
• Trump attempting to talk down oil prices with every opportunity

And yet, despite it all, Canadian energy stocks have remained stubbornly strong. Pictured below is the XEG.to ETF (iShares S&P/TSX Capped Energy Index ETF). It has remained mostly flat for the year, which is interesting to note given all of the negative headlines, and as of this morning broke to highs not seen since 2014.

What does it all mean for the Canadian energy sector? If bad news can’t knock it down, is oil and gas gearing up for a move higher into winter?

Chart courtesy of StockCharts.com