The Zhitong Finance App learned that although most oil and gas stocks in the US stock market weakened on Monday due to a sharp drop in crude oil futures prices, mainly because the Organization of Petroleum Exporting Countries (OPEC) lowered its global oil demand growth forecast for this year and next for three consecutive months, Canadian oil and gas giant TC Energy (TRP.US) stood out from the entire US oil and gas sector, and US stocks rose 2.4% as of Monday's closing. Previously, Wall Street bank J.P. Morgan upgraded the stock's rating from “neutral” to “increased holdings,” and the target price was 69 Canadian dollars, up from 64 Canadian dollars previously paid by the bank, and it is expected that the stock will have room to rise significantly compared to its US peers.

Global oil and gas stocks, including US stocks and oil and gas stocks in the Canadian stock market, fell sharply on Monday and Tuesday, mainly because OPEC lowered global oil demand expectations in its latest monthly report. This is also the third month in a row that OPEC lowered its global oil demand growth forecast for this year and next. This report also made most crude oil futures traders begin to believe in the oil “oversupply” view put forward by major Wall Street banks such as Goldman Sachs and Morgan Stanley — that is, starting in 2025, the oil market will continue to exceed demand.

As OPEC lowered its overall oil demand forecast three times in a row, including crude oil and various refined oil products obtained from crude oil processing, OPEC has finally begun to abandon the strong bullish forecast it has held since this year. The organization seems to have finally realized that the scale of global fuel use is slowing down sharply. After the release of this latest monthly report, Brent crude oil futures prices, the benchmark for international crude oil prices, fell sharply by more than 2% on Monday, continuing the decline of last Friday. Brent crude continued to plummet on Tuesday, falling more than 3% as of press time.

However, for Canadian oil and gas giant TC Energy, the capital seems to have firmly chosen to follow J.P. Morgan's bullish stock. The main logic is that global data centers are experiencing a surge in demand for clean energy, natural gas, under the AI era. This can be described as a major continuing benefit for TC Energy, which focuses on natural gas power generation and pipeline gas transportation.

Although the oil and gas midstream sector has performed well this year, J.P. Morgan analyst Jeremy Tonnett said that TC Energy's performance and stock price still have room to rise. In particular, the enthusiasm for large-scale expansion or construction of data centers in North America makes the performance prospects of gas midstream companies brighter, because the huge incremental scale of natural gas power generation will benefit natural gas energy pipeline transportation companies.

J.P. Morgan said that US gas leveraged midstream companies Williams (WMB.US), KMI.US (KMI.US), and DT Midstream (DTM.US) performed strongly. New gas pipeline projects that serve power generation customers focusing on natural gas as a clean energy have triggered positive revisions in performance expectations and expansion in valuation. The J.P. Morgan Chase analysis team led by Tonnett said that TC Energy performed best. The analysis team believes that the stock has room to rise sharply compared to its US peers, especially as the company begins to further determine its gas pipeline expansion levers to meet growing demand for clean electricity and huge liquefied natural gas exports.

Furthermore, the J.P. Morgan Chase analysis team said that T.C. Energy's dividend yield of up to 5.4% is very attractive in the current environment, and its yield is far higher than most gas peers. As of Monday's US stock closing, T.C. Energy closed at $46.78 in the US stock market and 62 Canadian dollars in the Canadian stock market. Compared with J.P. Morgan Chase's target price of 69 Canadian dollars, there is about 11% upside.

With the full spread of AI technology, especially large-scale AI models and AI applications such as ChatGPT, data centers have become the core facilities for efficiently processing and storing large amounts of data. ChatGPT became popular all over the world in 2023. The big Sora Wensheng video model came out in 2024, and the unparalleled performance of Nvidia, the “seller” in the AI field, for several consecutive quarters may mean that human society will gradually enter the AI era starting in 2024. Large-scale AI data centers, which can be described as the core large-scale infrastructure project in the AI era, are essential for the efficient operation of generative artificial intelligence applications such as ChatGPT and the updating and iteration of large AI models such as GPT-4O.

Currently, technology companies and some government organizations are choosing to accelerate the expansion of the original data center infrastructure or build new AI data centers. Demand for energy from major data centers around the world, which are already “power-eating giants,” is expected to surge. The International Energy Agency predicts that by 2026, the total electricity consumption of global data centers will increase substantially from about 460 terawatt-hours in 2022 to at least 1,000 terawatt-hours. Terawatt-hours are used to describe the largest electricity levels, and are usually used for national-level energy statistics, planning and evaluation of large-scale energy projects. Large industrial facilities, such as super steel plants, may consume less than 10 terawatt-hours of electricity in a year.

However, large data centers such as Google, Microsoft, and Amazon AWS have extremely strong demand for clean energy such as natural gas, mainly due to the global decarbonization trend, which focuses on renewable resources such as wind power and geothermal heat with clean properties, and efficient energy with the same clean energy properties — natural gas, which may be the most important resource for future AI power generation systems. US gas giant EQT Energy (EQT.US) recently said that in the next few years, artificial intelligence data centers will become the biggest growth point for US gas demand.

Wells Fargo, a major Wall Street bank, predicts in a report that by 2030, US gas demand may increase by 10 billion cubic feet per day, which will be a significant 28% increase over the current level of natural gas consumed by the US power generation scale, accounting for 10% of the total daily natural gas consumption in the US. According to a recent report by energy consulting firm Rystad Energy, renewable energy sources such as solar energy and wind energy may be difficult to meet the huge power supply required by AI data centers due to their own instability. Therefore, Rystad Energy said that in the future, it will need an efficient clean energy that can fill the supply gap when the scale of renewable energy generation is far insufficient. Under such circumstances, the traditional energy industry generally bets that natural gas will become the clean energy of choice.