JPMorgan Reshuffles Oil Sands Bets: Upgrades Suncor, Downgrades Cenovus
As global oil surpluses loom for 2026, analyst Arun Jayaram advises investors to seek shelter in Suncor’s execution story while fading Cenovus on valuation fears.
Wall Street has officially flipped the script on the Canadian oil patch. If you were riding the wave of broad Canadian outperformance in 2025, JPMorgan analyst Arun Jayaram has a sobering message for your portfolio: the easy money has been made, and it is time to get picky. In a decisive shakeup of his coverage this Tuesday, Jayaram advised clients to swap their Cenovus Energy shares for Suncor Energy, predicting a turbulent 2026 defined by crude surpluses and widening discounts for Canadian heavy oil.
The bank’s outlook for the coming year is decidedly gloomy for the commodity itself. JPMorgan forecasts a year marked by substantial global surpluses, predicting that global supply will surge by 1.1 million barrels per day in 2026, easily outpacing a demand growth of just 900,000 barrels per day. While this macro backdrop casts a shadow over the entire sector, Jayaram argues that the rising tide that lifted all Canadian boats in 2025 has receded. The result is a stark "role reversal" where U.S. producers are now poised to outperform their northern peers, boasting superior free cash flow yields and higher cash returns.

