Energy Market Shock: AI, Natural Gas, and Canadian Oil Tariff Fears | Ninepoint Energy Market Update

Eric Nuttall, January 30, 2025 - In this week’s update, Eric Nuttall, Senior Portfolio Manager of Ninepoint Energy Strategies, breaks down a volatile week in energy markets, driven by fears over AI’s impact on energy demand, ongoing natural gas weakness, and growing concerns over potential 25% tariffs on Canadian oil.

The week kicked off with a massive market selloff following the announcement of DeepSeek AI, a new AI platform claimed to be far less energy-intensive. This triggered a sharp decline in power producers, uranium stocks, and natural gas companies, with total market losses exceeding $1 trillion. But was the panic justified? Eric explains why AI-driven energy demand concerns may be overblown and why the long-term bullish thesis on natural gas remains intact.

On the oil front, Canadian crude stocks remain under pressure amid uncertainty over U.S. tariff threats. Eric explores the likelihood of these tariffs being implemented, why Canada remains the cheapest and most reliable energy supplier to the U.S., and what this means for investors.

Despite the recent turbulence, global oil inventories are now at their lowest levels on record, U.S. shale growth continues to slow, and demand remains resilient. With fundamentals still pointing to a bullish long-term outlook, Eric shares insights on why energy stocks remain undervalued and how investors can position themselves for 2025.

Key Topics Covered:
• DeepSeek AI & Energy Markets: Why fears over AI-driven energy demand destruction may be overblown.
Natural Gas Outlook: U.S. LNG capacity is set to double by 2030, but why are natural gas stocks struggling?
• Canadian Oil Tariff Concerns: Will the U.S. impose a 25% tariff on Canadian crude, and what are the potential impacts?
• Global Oil Inventories: Why inventories are at multi-year lows and what this means for crude prices.
• U.S. Shale Production Trends: The reality behind the “drill baby drill” narrative and why production growth is slowing.
• Investor Sentiment & Market Flows: How tariff fears are driving fund outflows and energy stock volatility.

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