Despite the fact that most oil and gas stocks in the US stock market weakened on Monday due to a significant drop in crude oil futures prices, primarily because the Organization of the Petroleum Exporting Countries (OPEC) has lowered its global oil demand growth forecast for this year and next for three consecutive months, the Canadian oil and gas giant TC Energy (TRP.US) stood out from the entire US oil and gas sector, closing up 2.4% on Monday. This came after the Wall Street giant JPMorgan Chase upgraded its rating on the stock from "neutral" to "overweight," raising its target price to CAD 69, up from the previous CAD 64, and predicting significant upside potential for the stock relative to its US peers.

Global oil and gas stocks, including those in the US and Canadian stock markets, saw significant declines on Monday and Tuesday, mainly due to OPEC's latest monthly report, which lowered global oil demand expectations. This is the third consecutive month that OPEC has revised down its global oil demand growth forecasts for this year and next. The report has also led many crude oil futures traders to start believing in the "oversupply" view of oil proposed by Wall Street giants such as Goldman Sachs and Morgan Stanley—that is, starting in 2025, the oil market will face a situation where supply consistently exceeds demand.

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With OPEC's three consecutive downward revisions of overall oil demand expectations, including both crude oil and various refined petroleum products obtained after processing crude oil, OPEC finally seems to be abandoning its strong bullish forecasts that it has held since the beginning of the year. The organization appears to have finally realized that the scale of global fuel use is slowing down sharply. Following the release of this latest monthly report, the benchmark international crude oil price—Brent crude futures—plunged significantly, falling by more than 2% on Monday, continuing the downward trend from last Friday. On Tuesday, Brent crude continued to plummet, with a drop of over 3% as of press time.

However, for the Canadian oil and gas giant TC Energy, capital seems to have firmly chosen to follow JPMorgan Chase's bullish stance on the stock. The main logic lies in the surge in demand for clean energy—natural gas—by global data centers in the era of artificial intelligence (AI). This is a significant and sustained positive for TC Energy, which focuses on natural gas power generation and pipeline transportation.

Although the oil and gas midstream sector has performed well this year, JPMorgan Chase analyst Jeremy Tonet said that there is still room for TC Energy's performance and stock price to rise, especially as the enthusiasm for large-scale expansion or new construction of data centers in North America brightens the performance prospects of natural gas midstream companies. The substantial increase in natural gas power generation capacity will benefit natural gas pipeline transportation companies.

JPMorgan Chase stated that strong performances were seen from US natural gas leveraged midstream companies such as Williams (WMB.US), Kinder Morgan (KMI.US), and DT Midstream (DTM.US). New natural gas pipeline projects serving customers focused on clean energy generation have triggered positive earnings expectation revisions and valuation expansion. Tonet-led JPMorgan Chase's analysis team said that TC Energy's performance was the most outstanding, and the team believes that the stock has significant upside potential relative to its US peers, especially as the company begins to further secure its natural gas pipeline expansion leverage to meet the growing demand for clean electricity and substantial liquefied natural gas (LNG) export needs.

In addition, JPMorgan Chase's analysis team said that TC Energy's dividend yield of up to 5.4% is very attractive in the current environment, far exceeding the yields of most natural gas peers. As of Monday's US stock market close, TC Energy closed at $46.78 in the US market and CAD 62 in the Canadian market, with approximately an 11% upside from JPMorgan Chase's target price of CAD 69.

With the widespread adoption of AI technology, especially large-scale AI models and AI applications such as ChatGPT, data centers have become the most core facilities for efficiently processing and storing large amounts of data. In 2023, ChatGPT swept the globe, and in 2024, the Sora text-to-video large model was launched with great fanfare, along with NVIDIA's unparalleled performance for several consecutive quarters in the AI field, possibly indicating that human society has gradually entered the AI era starting from 2024. Large AI data centers can be considered the most core large-scale infrastructure projects of the AI era, which are crucial for the efficient operation of generative AI applications such as ChatGPT and the update and iteration of AI large models such as GPT-4o.

Currently, technology companies and some government organizations are accelerating their demand for AI data centers, choosing to accelerate the expansion of existing data center infrastructure or build new AI data centers. The global data centers, which are already "power-eating beasts," are expected to see a surge in energy demand. The International Energy Agency estimates that by 2026, the total electricity consumption of global data centers will increase significantly from about 460 terawatt-hours in 2022 to at least 1000 terawatt-hours. Terawatt-hours are used to describe the most massive levels of electricity, usually for national energy statistics, planning, and assessment of large energy projects. Large industrial facilities, such as super steel mills, may consume less than 10 terawatt-hours of electricity in a year.

The strong demand for clean energy such as natural gas from large data centers like Google, Microsoft, and Amazon AWS is mainly due to the global decarbonization trend. Focusing on clean attributes such as wind power, geothermal, and other renewable resources, as well as efficient energy with clean energy attributes—natural gas—may be the most important resources for future AI power generation systems. US natural gas giant EQT Corporation (EQT.US) recently stated that in the coming years, artificial intelligence data centers will become the largest growth point for natural gas demand in the United States.In a report, Wells Fargo, a major Wall Street bank, predicts that by 2030, the daily demand for natural gas in the United States may increase by 10 billion cubic feet, which is a significant increase of 28% compared to the current level of natural gas consumption for power generation in the United States, accounting for 10% of the country's total daily natural gas consumption. A recent report from Rystad Energy, an energy consulting firm, indicates that renewable energy sources such as solar and wind power, due to their inherent instability, may struggle to meet the massive power supply required by AI data centers. Therefore, Rystad Energy states that in the future, an efficient clean energy source will be needed to fill the supply gap when renewable energy generation falls far short. In this scenario, the traditional energy industry is generally betting that natural gas will become the preferred clean energy source.