Canadian Natural Resources (TSX: CNQ) is down more than 20% over the past year. Investors who missed the big post-pandemic rally are wondering if the pullback is a good opportunity to buy CNQ stock for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
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Oil market outlook
The price of West Texas Intermediate (WTI) oil is US$60 per barrel at the time of writing compared to around US$80 a year ago. Brief rallies occurred in June and January, but the trend has otherwise been to the downside in the oil market for the past 12 months.
The 2024 decline can be blamed on weak demand from China due to the country’s struggling economy. China is by far the largest oil buyer in the world, well ahead of the United States, which is a distant second place. Oil prices also faced headwinds in the past year due to rising production in non-OPEC countries, including the U.S. and Canada.
In 2025, the story centres around concerns about the economic impacts of a potential global trade war. If tariffs trigger a recession in the United States and cause more economic pain in China, oil prices could continue to slide. The U.S. wants lower oil prices to remain in place to push down gasoline costs as inflation risks build due to the tariffs.
In the near term, the market will have a tough time finding a catalyst to drive oil prices materially higher. Energy analysts widely expect the oil market to be in a surplus situation this year and into 2026.
Canadian Natural Resources’s share price
CNRL trades near $40 per share right now. It was as high as $53 in the past 12 months and recently slipped as low as $35 before clawing back some of the losses. Investors who have followed the stock for some time know that CNRL rebounded from as low as $10 in 2020 at the bottom of the pandemic rout, so it can deliver big gains when market conditions improve.
CNRL has a broad portfolio of assets in the energy segment. The company operates oil sands, conventional heavy oil, conventional light oil, and offshore oil production. CNRL is also a major Canadian natural gas producer. The company is adept at quickly moving capital around the portfolio to take advantage of the best opportunities in the market. CNRL also enjoys a strong balance sheet that enables management to make large acquisitions to drive revenue and resource growth.
Dividends
CNRL raised the dividend in each of the past 25 years. This is a great track record for a business that relies on commodity prices to drive its revenue and earnings. The board increased the distribution twice in 2024 and has already raised the payout in 2025 despite weak oil prices.
Investors who buy CNQ stock at the current level can get a dividend yield of 5.8%.
Should you buy now?
Near-term volatility should be expected and more downside is certainly possible for the stock. That being said, income investors might want to start nibbling at this level for the attractive yield and look to add on further weakness. At some point, the oil market will rebound.
