Bernstein calls for the coming of the "super cycle" of natural gas! Rating increase for two American natural gas giants

As of Wednesday's closing bell on the US stock exchange, EQT Corporation (EQT.US) rose 3.45% to $52.44, Devon Energy Corporation (DVN.US) rose 3.36% to $38.43. Wall Street investment firm Bernstein upgraded the stock rating of these two American natural gas giants from "in line with the market" to "outperforming the market," emphasizing that the "super cycle" of natural gas is approaching, with target stock prices set at $73 and $45, respectively. Bernstein analysts believe that starting this year, the trend of insufficient supply in the natural gas and LNG (liquefied natural gas) export markets driven by cold weather and strong demand from Europe and Asia, along with the massive power demand brought by data centers, will push the US natural gas trading price to break through $5 per million British thermal units soon. The supply-demand imbalance may continue strong until 2030, providing a unique opportunity for long-term value creation in natural gas. As of Wednesday's closing on the US stock exchange, US natural gas futures prices were hovering around $4 per million British thermal units. The Bernstein team led by analyst Bob Brackett sees EQT Corporation as the preferred choice for natural gas price exposure due to its high leverage effect on natural gas prices. They also point out that while Devon Energy Corporation does not have international natural gas exposure, its huge exposure to the US natural gas market will bring strong growth data. This is in contrast to APA (APA.US) and EOG (EOG.US), as the latter two have strategically diversified their natural gas price exposure. The analyst did not argue which strategy is best during the entire natural gas super cycle, but stated that at this point in time, exposure to US Henry Hub risk configuration is clearly the top choice. The Bernstein analysis team predicts that from 2024 to 2030, the scale of approved and developing LNG export projects will "significantly grow and the growth rate is highly certain." At the same time, they expect a significant growth in power demand from large AI data centers from 2024 to 2030, leading to a demand for natural gas, a clean and efficient energy source, of at least 120 billion cubic feet per day. Since entering the cold weather in December, European natural gas prices have sharply risen due to demand and storage pressure. The recent severe cold weather in northwestern Europe will further intensify the pressure on European natural gas storage. The Dutch TTF natural gas futures price surged to its highest point since November 2023. Meanwhile, with Russia stopping the supply of pipeline natural gas to Europe since January 2025, American LNG is accelerating to fill the supply gap in the region. This also brings uncertainty to the current supply of natural gas in the US and the entire LNG supply system in Asia that relies on US LNG. Therefore, some Wall Street analysts say that European natural gas prices may continue to rise in early 2025, and global LNG prices will also rise under the drive of Asian demand. Since the escalating Russia-Ukraine conflict in 2022 has almost interrupted Russia's pipeline natural gas supply to Europe, Russian cheap pipeline natural gas has completely terminated, forcing the European continent to rely more on this super-cold fuel that requires LNG freighters for global long-distance transport. Although new LNG supply will continue to increase in 2025, the sustained high demand for LNG in Europe and Asia in recent years will support the rise in LNG prices, especially under the promotion of energy transition and decarbonization policies. Given the "efficient and clean" dual attributes of natural gas, it still plays an important role as a "transitional energy" in the face of the global trend towards decarbonization. Some analysts believe that artificial intelligence is also an important factor driving the growth in demand for liquefied natural gas. Large data centers such as Alphabet Inc. Class C, Microsoft Corporation, and Amazon.com, Inc. AWS have had a tremendously strong demand for clean energy fuels such as natural gas in recent years. This is mainly due to the global trend towards decarbonization in developed countries, focusing on clean attributes such as wind power, geothermal, and other renewable resources, as well as the more efficient energy source - natural gas, which is also a part of Clean Energy Fuels Corp. The future of the power system for data centers in the next few years. LNG giant Venture Global Inc. in Arlington, Virginia, plans to raise $2.3 billion through its IPO on the US stock market, making it the largest IPO since U.S. Energy Corp. in 2013. LNG is expected to become an important part of the global energy market in the coming years, as countries seek cleaner energy alternatives to oil and coal. The position of the United States as the world's largest LNG supplier will be further strengthened. With Trump returning to the White House, he may push for relaxed regulatory rules, making it easier to build LNG export terminals.