Gas Emerges as Top Energy Bet, Outshining Oil, Says Top Fund Manager

As oil prices hover around $60 a barrel, a prominent Canadian fund manager is making a contrarian call: the next major opportunity in energy isn’t oil, but natural gas. Eric Nuttall, Senior Portfolio Manager at Ninepoint Partners, revealed that his Ninepoint Energy Fund has allocated 60% of its portfolio to natural gas assets, significantly outweighing its 27% exposure to oil. He describes the current oil market as facing one of the most certain supply gluts in history.

While Nuttall acknowledges that a near-term surge of sanctioned oil hitting the market could pressure prices, he believes the focus will soon shift to positive catalysts. These include stronger-than-expected demand growth and a continued shrinkage in OPEC’s spare capacity. This optimistic demand view is bolstered by the International Energy Agency, which recently doubled its 2024 global oil demand growth forecast to 1.3 million barrels per day.

Bull Case for Natural Gas

Nuttall’s significant bet on natural gas is built on three core pillars:

1. Strong Pricing: Expectations that natural gas prices will hold around $4 per million British thermal units (MMBtu) over the next three years.
2. Soaring LNG Exports: A massive expansion in U.S. liquefied natural gas (LNG) export capacity, projected to jump from the current 17 billion cubic feet per day (Bcf/d) to 30 Bcf/d by year-end.
3. AI Power Demand: A surge in electricity consumption from the rapid growth of artificial intelligence and data centers, providing a new, structural driver for gas-fired power generation.

A Tale of Two Markets: U.S. Discipline vs. Canadian Excess

Nuttall draws a sharp contrast between U.S. and Canadian natural gas producers. He is strongly bullish on U.S. companies, praising their “supply discipline”—the ability to proactively cut production during periods of weak prices to maintain market health and profitability. This discipline, he argues, positions them to fully capitalize on the historic opportunity presented by LNG exports and AI-driven power demand.

Conversely, he is critical of Canadian producers, whom he says lack similar discipline. Their tendency to continue increasing production has suppressed local prices and led to underperformance relative to their U.S. peers. As a result, Nuttall views many Canadian firms as undervalued acquisition targets rather than compelling long-term holdings.

Investment Picks: Targeting Key Links in the Gas Chain

For investors looking to capitalize on this trend, Nuttall’s analysis points to specific companies across the natural gas infrastructure and export ecosystem:

• Solaris Energy Infrastructure Inc. (SEI): Positioned to benefit from the AI boom, it provides mobile natural gas turbines to data centers, reportedly securing超额 orders.
• Cheniere Energy Inc. (LNG): As America’s largest LNG exporter, it stands to gain directly from expanding export capacity and supportive policies.
• Kinder Morgan Inc. (KMI): This operator of a major U.S. pipeline network is a critical midstream player, currently supplying 8 Bcf/d of gas to LNG export facilities.

As the global energy transition accelerates, the natural gas market appears to be at the start of a new investment cycle, powered by robust demand, constrained supply discipline, and critical infrastructure upgrades.

AI Clean Energy Natural Gas Oil & Gas