Canadian Energy Companies Ride High European Gas Prices

European natural gas prices have surged in recent weeks due to low storage levels and disruptions in Middle East LNG exports. As a result, two Canadian companies are benefiting from these higher prices: Vermilion Energy (VET) and Tourmaline Oil (TOU). According to Scotiabank analyst Chris Macculloch, VET's international gas production is estimated at 97 mmcf/d in Q4/26 and 93 mmcf/d in 2027, while TOU's exposure to international pricing stems from its LNG feedgas supply contracts.

Macculloch estimates that for every US$5/mcf increase in prices, VET and TOU's FCF yield would expand by 4.5 per cent and 1.3 per cent, respectively. This is based on the current European natural gas storage levels, which are tracking at a five-year low of 2.6 Tcf (trillion cubic feet) as of September 10, 2026.

Meanwhile, fund managers remain bullish on the macro boom and fast-paced AI capex, but risks such as disorderly bonds and DEM midterm sweep are rising. The BofA Securities monthly survey found that investors expect a flatter yield curve and most likely see a DEM House/GOP Senate outcome, although DEM sweep odds are increasing.

Wells Fargo's Ohsung Kwon has cut the S&P 500 target to 7700 by YE26 from 7950, citing limited upside. He believes that the equity allocation is too high at 72 per cent and estimates a fair level of 60 per cent, implying a 12 percentage point gap.