The energy sector is approaching a cyclical low, even amid potential oil and gas supply surpluses. Investors are beginning to look beyond short-term commodity volatility to identify longer-term strategic opportunities. William Blair’s Neal Dingmann, research analyst, maintains a relatively bullish stance on oil, driven by declining U.S. inventory levels. In contrast, due to its increased domestic supply, he holds a more cautious view on natural gas in the near term. However, the expansion of liquefied natural gas (LNG) projects and growing demand from data centers support medium- to long-term optimism for natural gas.
End-use fossil fuel demand remains strong, particularly from artificial intelligence applications and data centers. Energy companies have significantly improved their financial health through enhanced operational efficiencies and strategic capital allocation, with a growing emphasis on shareholder returns. Quality U.S. oil inventory is declining faster than market expectations, while gas inventory remains stable, resulting in elevated pricing for premium oil and gas acreage.
For more information about our energy and power technology equity research, please contact us or your William Blair representative.