RJ Hamster
Natural Gas Found Its Spark – How to Play…
Eric Fry
Editor, Smart Money
DAILY ISSUE
Natural Gas Found Its Spark – How to Play Past the Rally
Hello, Reader.
A huge winter storm blanketed roughly two-thirds of the continental U.S. in snow and ice this weekend. Hundreds of thousands of people have been left without power… and in need of natural gas.
Natural gas is the primary fuel for home heating and electricity in much of the U.S. So, when a winter storm hits, heating demand jumps sharply.
That’s why gas often rallies around major cold-weather events. We see this happening right now: On Monday, U.S. natural gas prices soared to their highest levels in three years.
Now, I am optimistic about the natural gas sector and expect it to perform well in 2026.
I believe that the time has come for natural gas stocks to reflect the bullish trends already underway beneath the surface.
In short, the reckoning between gas prices and gas stocks is overdue, especially because natural gas demand continues to rise far faster than supply. The Energy Information Administration expects U.S. gas demand to surge 5.8% over the next two years, while supply grows only 3.6%.
When demand grows almost twice as fast as supply, inventories drain. And when inventories drain, the price floor tends to shift higher.
It is important to note that if the natural gas rally is weather-driven, like we’re seeing, prices can fall just as fast as they rose. But gas consumption from traditional sources – U.S. industries and households – continues its steady climb.
What’s more, a couple of new kids on the block are muscling their way into the natural gas market.
Their names are “Liquid Natural Gas” and “AI Data Centers.”
In today’s Smart Money, let’s dive into how these “new kids” are increasing demand.
Plus, I’ll share an overlooked U.S. natural gas producer that deserves far more respect from investors.
Let’s dive in…
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LNG Demand Doesn’t Care About the Weather
The United States has become the world’s largest LNG exporter. LNG plants along the Gulf Coast now absorb more than 14% of total U.S. natural gas production and ship it to destinations in Europe and Asia. And as the chart below shows, these exports keep rising.
Once an LNG facility starts up, its demand does not fluctuate with seasonal weather conditions. It pulls gas like a vacuum cleaner, nonstop, year-round, as long as a hefty price differential exists between pricey European gas and cheap U.S. gas.
AI Data Centers Create a New Source of Demand
A second major source of natural gas demand has also arrived on the scene: data centers.
Although AI runs on “the cloud,” the cloud does not run on vapor. It runs on electricity. And that electricity increasingly comes from natural gas.
Goldman Sachs estimates that natural gas will power 60% of incremental electricity demand from AI data centers over the next few years.
This new demand is not hypothetical. LandBridge Co. LLC (LB), a major landholder in the Delaware Basin in West Texas and southeastern New Mexico, is already pitching a “Data Center Alley” concept built entirely around natural-gas-fired power plants.
Three months ago, the company announced a new joint venture with NRG Energy Inc. (NRG) to build a natural gas-powered data center site in the Delaware Basin, which sits in the northwest portion of the Permian Basin.
Importantly, the building site lies adjacent to the Waha gas market hub. That strategic location provides direct access to substantial low-cost natural gas and existing transmission infrastructure.
With LNG on one side and AI data centers on the other, natural gas suddenly finds itself with more suitors than it can handle.
This is where the opportunity lies. And here’s the best way to capitalize on it…
Opportunity Abounds in the Delaware Basin
For the last few years, the Delaware Basin has been rapidly boosting its production of both oil and gas. Unfortunately, gas volumes have overtaken pipeline capacity.
As a result, much of the gas from the Delaware Basin is “stranded” – the oil and gas industry’s polite way of saying “worthless unless you can move it.”
Producers flared it. Trucked it. Discounted it to oblivion.
As such, the Delaware Basin has behaved for years like a brilliant student stuck in detention. It held enormous potential, but no way to express it.
And now, detention is ending.
In fact, the opportunity in this region is more like a scholarly pupil prepping for a pop quiz. It’s coming – that much is known – so it’s best to be prepared early for when it does.
That is why I recommended one of the leading producers in the Delaware Basin to my Fry’s Investment Reportsubscribers a little over a year ago. This “Buy” was an early call on natural gas.
This company is positioned squarely at the intersection of LNG exports and AI-driven power demand. The result is a company positioned to thrive as the natural gas market turns.
It currently trades at a deep discount, priced at barely half the valuation of the companies in the First Trust Natural Gas ETF. So, the time to get in is now.
To restate, I expect the natural gas sector to perform well this year.
So, click here to learn how to access the name of this natural gas play.
Regards,
Eric Fry
Editor, Smart Money
P.S. Natural gas isn’t the only thing all those data centers need. Power is just one piece of the puzzle. The next phase of the AI buildout will also depend on the physical infrastructure behind the scenes — critical materials, advanced manufacturing, and the industrial supply chains that make the entire AI boom possible.
That’s why my colleague Luke Lango has been tracking what he calls “Project Genesis” — a major government-backed push to accelerate America’s AI and energy-industrial foundation. And he believes it’s creating a narrow window of opportunity in the companies positioned at key chokepoints.
Luke is hosting a free broadcast breaking down the full Genesis framework and the stocks most likely to benefit as capital starts moving. If you want to see what comes after the natural gas demand surge, I encourage you to watch it now.
