Finance and Economics APP learned that despite the sharp drop in crude oil futures prices on Monday causing most oil and gas stocks on the U.S. stock market to weaken, mainly due to the Organization of the Petroleum Exporting Countries (OPEC) lowering global oil demand growth forecasts for this year and next for three consecutive months, Canadian oil and gas giant TC Energy (TRP.US) stands out from the entire U.S. oil and gas sector, rising 2.4% at the close of Monday's U.S. trading. Prior to this, JPMorgan, a Wall Street major, upgraded the stock from "Neutral" to "Hold", giving a target price of 69 Canadian dollars, slightly higher than the previous 64 Canadian dollars and expecting the stock to have significantly more upside compared to its U.S. peers.

Global oil and gas stocks, including U.S. and Canadian oil and gas stocks, experienced significant declines on Monday and Tuesday, mainly due to OPEC lowering global oil demand expectations in the latest monthly report. This marks the third consecutive month that OPEC has cut its global oil demand growth forecasts for this year and next. This report has led most crude oil futures traders to believe in the "over-supply" view of oil proposed by major Wall Street banks such as Goldman Sachs and Morgan Stanley – that is, starting from 2025, the oil market will face a situation where supply consistently exceeds demand.

With OPEC continuously revising down overall oil demand expectations, including crude oil as well as various oil products obtained after processing crude oil, OPEC is finally abandoning its strong bullish predictions that it has held since the beginning of this year. The organization seems to have finally realized that the global fuel consumption scale is rapidly slowing down. Following the release of this latest monthly report, the international crude oil price benchmark - Brent crude oil futures prices saw a sharp decline, dropping by over 2% on Monday, continuing the decline from last Friday. On Tuesday, Brent crude oil continued to fall, dropping by over 3% at the time of writing.

However, for Canadian oil and gas giant TC Energy, funds seem to firmly follow JPMorgan's bullish view on the stock. The main logic behind this is that in the era of AI, the increasing demand for clean energy - natural gas from global data centers poses a significant continuous bullish trend for TC Energy, which focuses on natural gas power generation and pipeline transportation.

Although the midstream sector of the oil and gas industry has performed well this year, JPMorgan analyst Jeremy Tonet mentioned that TC Energy still has room for performance and stock price growth. Particularly, the strong enthusiasm for large-scale expansion or new construction of North American data centers in the AI era brightens the prospects for midstream companies focusing on natural gas, as the massive increase in natural gas power generation scale will benefit natural gas pipeline transportation companies.

JPMorgan stated that U.S. natural gas leveraged midstream companies such as Williams (WMB.US), Kinder Morgan (KMI.US), and DTM Midstream Company (DTM.US) have shown strong performance. These companies providing services for new natural gas pipeline projects focusing on natural gas, a clean energy source, have triggered positive performance expectations adjustments and valuation expansions. Led by Tonet, JPMorgan's analyst team believes that TC Energy has performed the best, and this analyst team believes that the stock has significantly more upside potential compared to its U.S. peers, especially as the company starts to further solidify its natural gas pipeline expansion lever to meet the continuously growing demand for clean electricity and massive liquefied natural gas exports.

In addition, the analyst team at JPMorgan Chase stated that TC Energy's high dividend yield of 5.4% is very attractive in the current environment, with the yield far higher than most natural gas peers. As of Monday's U.S. market close, TC Energy closed at $46.78 on the U.S. market and at $62 CAD on the Canadian market, representing about 11% upside from JPMorgan's $69 CAD target price.

With AI technology, especially the widespread application of large-scale AI models like ChatGPT, datacenters have become the most vital facilities for efficient processing and storing large amounts of data. By 2023, ChatGPT became popular worldwide, 2024 saw the debut of Sora Video Model and continuous exceptional performance from AI giant NVIDIA in the field of 'AI shovel salesperson,' implying a gradual entry into the AI era for human society starting from 2024. Large AI datacenters are arguably the most critical large-scale infrastructure projects in the AI era, vital for the efficient operation of generative AI applications like ChatGPT and the essential updating and iteration of AI models like GPT-4o.

Current technology companies and some government organizations are accelerating their demand for AI datacenters, choosing to expand existing datacenter infrastructure or build new AI datacenters. The already 'power-devouring beasts' of the world's major datacenters are expected to experience a surge in energy demand. The International Energy Agency forecasts that by 2026, the total electricity consumption of global datacenters will significantly increase from approximately 460 terawatt-hours in 2022 to at least 1000 terawatt-hours. Terawatt-hours describe the largest power levels and are typically used for national energy statistics, large-scale energy project planning, and evaluation. Large industrial facilities like super steel mills may consume less than 10 terawatt-hours of electricity in a year.

The massive datacenters of tech giants like Google, Microsoft, and Amazon AWS exhibit an incredible demand for clean energy sources like natural gas, primarily focusing on clean attributes of renewable resources such as wind power, geothermal energy, and the highly efficient energy source - natural gas, within the global decarbonization trend. It is expected that under this trend, artificial intelligence power systems will heavily rely on clean energy resources. U.S. natural gas giant EQT Energy (EQT.US) recently stated that in the coming years, AI datacenters will become the largest growth point for U.S. natural gas demand.

Wells Fargo & Co. on Wall Street forecasts, by 2030, the daily U.S. natural gas demand may increase by 10 billion cubic feet, a significant 28% increase over the current natural gas consumption level for power generation in the U.S., accounting for 10% of the total daily natural gas consumption in the U.S. Recent reports from energy consultancy Rystad Energy indicate that renewable energy sources such as solar and wind power, due to their own instability, may struggle to meet the massive power supply needs of AI datacenters. Therefore, Rystad Energy suggests that a highly efficient clean energy source will be needed in the future to fill the supply gap in scenarios where renewable energy generation is insufficient. In such situations, the traditional energy sector widely bets on natural gas to become the preferred clean energy source.