A couple of weeks ago during our Market on Close livestream, I fielded a question that was pretty close to my heart, in terms of my background as a trader:
How would I invest in the natural gas market?
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I told the viewer there were difficulties with overproduction of domestic natural gas (NG) and the term "associated gas," which is natural gas produced from drilling for crude oil. Plus, limited pipeline “takeaway” could depress cash prices, along with the possibility for a strong El Niño to produce above-average winter temperatures.
So, to find alpha in NG, I suggested we consider some of the liquefied natural gas (LNG) producers here in the U.S. – a group that includes Cheniere Energy (LNG); Venture Global (VG), which I own; and Woodside Energy Group (WDS).
QatarEnergy’s CEO on Thursday confirmed he’s buying LNG on the U.S. market, including from Venture Global, after extensive damage to two LNG trains in Iranian attacks resulted in a loss of about 17% capacity. Specifically, Reuters reports QatarEnergy is in advanced talks with Venture Global for a long-term deal to buy 3 million metric tons per year.
One of the top domestic LNG exporters, Venture Global is scheduled to report earnings before the market opens on Tuesday, November 10. The company has beaten analysts’ bottom-line estimates in each of the past three quarterly reports.
Along with the wartime supply crunch, VG could benefit from the ongoing power demand generated by the AI buildout. Venture Global has partnered with both GE Vernova (GEV) and Baker Hughes (BKR) for on-site, gas-powered electricity generation for the data center industry.
The initiative builds on Venture’s prior experience operating its own off-grid power plants, CEO Michael Sabel recently told The Wall Street Journal: “We think we’ll be able to build our AI utility to one of the larger ones in the U.S. in the next few years.”
There’s also a historically favorable regulatory environment to consider, per this Oct. 15 news release from the Federal Energy Regulatory Commission:
In a historic, unanimous vote, the Federal Energy Regulatory Commission (FERC) proposed accelerating liquefied natural gas (LNG) infrastructure development through a landmark blanket authorization program. The proposal would streamline permitting, speed energy infrastructure development, and deliver unprecedented regulatory certainty for project developers.
Technically, VG on Thursday broke out of a recent trading range, and TrendSeeker was indicating a new “buy” signal.
VG breakout with TrendSeeker. To catch the full discussion on natural gas, watch our October 2 Market on Close episode, where the conversation starts right around 40:06. Or, check out this quick clip:
– John Rowland, CMT, is Barchart’s Senior Market Strategist and the host of Market on Close.
On the date of publication, Barchart Insights did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.