Analysts remain optimistic despite falling natural gas prices

Natural gas prices have been on a rollercoaster ride this year, dropping nearly 40% due to oversupply and a mild winter. However, analysts are now predicting a bullish trend for the commodity as we head towards the end of the year, with growing demand for electricity driven by artificial intelligence playing a key role.

According to JPMorgan’s Natasha Kaneva, natural gas is set to outperform all other commodities this year, including gold. The rise in AI usage is expected to significantly boost US natural gas consumption, with Kaneva noting that renewable technologies may not be able to meet the increasing electricity demand.

Goldman Sachs analysts also see a surge in natural gas demand, particularly from data centers powering AI technologies. They predict that global data center power demand will more than double by 2030, requiring significant investment in new power generation capacity.

As a result, stocks like Kinder Morgan, Xcel Energy, and the Southern Co. are expected to benefit from the growing energy demand. Despite natural gas prices currently trading below $2 per million British thermal units, both JPMorgan and Goldman Sachs analysts forecast prices to reach $4/MMBtu in the near future.

With the increasing reliance on AI technologies driving up electricity demand, natural gas is positioned to play a crucial role in meeting these needs and potentially leading to a significant price increase in the coming months.