The energy sector is on the brink of a major transformation, and Eric Nuttall, Senior Portfolio Manager at Ninepoint Partners, has some compelling insights to share. His top picks for January 21, 2026, focus on energy stocks, but the real story here is the market's future trajectory.
The Oil Market's Bullish Outlook:
The oil market is poised for a powerful, multi-year bull run, despite short-term concerns about inventory builds. While the Organization of the Petroleum Exporting Countries (OPEC) released additional barrels in mid-September 2025, the market's anxiety is temporary. The real game-changer is the expected peak in U.S. shale and non-OPEC production this year, accounting for roughly two-thirds of global oil supply. But here's the twist: the shale boom has created a false sense of energy security, leading to a decline in exploration and inventory growth. With global oil reserves at record lows and OPEC's spare capacity limited, the world is about to realize the loss of its largest incremental supply source of the past 13 years. This could lead to a significant price discovery process, as a post-shale world may not sustain oil prices in the US$50-70 range.
Natural Gas: A Cold Reality Check:
Natural gas prices took a hit in early January due to warm weather, but a historic cold snap across the U.S. has quickly shifted the narrative. Nuttall's bullish stance on natural gas is not weather-dependent but rather based on the substantial increase in liquefied natural gas (LNG) demand in the U.S. Gulf Coast. By 2030, this region is projected to be net short on gas. With rising LNG demand, data centers driving power demand, and electrification on the rise, Nuttall believes the marginal cost of supply is US$4 per thousand cubic feet (mcf). Prices below this threshold could discourage drilling, pushing the market into an even deeper deficit.
Top Stock Picks:
Expand Energy (EXE NASDAQ): As the largest natural gas producer in North America, Expand is perfectly positioned to capitalize on the natural gas bull market. With over 20 years of inventory near major demand growth areas, it commands premium pricing. Nuttall estimates a marginal cost of supply at US$4/mcf, and at this price, the stock offers a 14% free cash flow yield. He sets a target price of US$209, implying a 100% potential upside.
EQT Energy (EQT NYSE): EQT, the second-largest U.S. natural gas producer, operates in the Marcellus Shale and owns its gas infrastructure, giving it a cost advantage. Its inclusion in the S&P 500 makes it more attractive to generalist investors. With a vast inventory and exposure to rising power demand, EQT is undervalued, trading at 6.0X EV/CF and offering a 12% free cash flow yield at US$4 gas. Nuttall's target price of US$75 suggests a 46% potential upside.
Antero Resources (AR NYSE): Antero, a significant Marcellus Shale producer, recently expanded its inventory through an acquisition. While this temporarily delays shareholder returns, it offers high leverage to rising gas prices. Trading at 4.0 times 2027 cash flow and a 15% free cash flow yield, Antero is undervalued. Nuttall's fair value estimate of US$62 indicates an impressive 88% potential upside.
Past Picks and Performance:
- Meg Energy (MEG TSX): Acquired by Cenovus on Nov. 17, 2025, with a 35% return.
- Athabasca Oil (ATH TSX): A 47% return since the last pick.
- Arc Resources (ARX TSX): A modest 2% total return.
The energy market's future is a complex interplay of supply, demand, and geopolitical factors. Nuttall's insights provide a fascinating perspective on the sector's potential. But the question remains: Are these bullish predictions too optimistic, or is the energy market truly on the cusp of a multi-year rally? Share your thoughts and let's spark a conversation about the future of energy investments.
