Investing.com — Former President Donald Trump’s energy agenda, encapsulated by the slogan “drill, baby, drill,” promised reduced regulatory barriers, increased fossil fuel production, and lower commodity prices.

However, the reality of US energy production remains rooted in economic decisions made by independent producers rather than political directives. These companies, accountable to their shareholders, must weigh global market dynamics when considering whether to increase drilling activity.

According to Wells Fargo (NYSE:) analyst Ian Mikkelsen, while some deregulation in the oil and gas sector is likely under Trump’s administration, the scale and impact of these changes remain uncertain. The process of modifying regulations could face delays and competition from other legislative priorities.

Furthermore, the Republicans’ narrow majority in Congress may constrain the breadth of reforms.

“One area that may be relatively easy to address is the permitting process for drilling on federal land,” Mikkelsen notes.

The Biden administration, in 2021, implemented stricter policies on federal leasing and permitting and raised production royalties, leading to a marked decline in the issuance of new drilling leases. Streamlining this process could reduce operational costs for companies operating on federal lands, which account for approximately 12% of US onshore oil production.

With the current lack of clarity regarding the potential scope of deregulation, Wells Fargo is maintaining their existing preferences within the energy sector.

More concretely, the firm continues to recommend Integrated Oil and Midstream Energy companies for investors seeking exposure.

Oil prices climbed on Wednesday as the market turned its attention to the potential supply disruptions stemming from US sanctions targeting Russian energy companies and tankers transporting Russian crude.

In its monthly oil market report released on Wednesday, the International Energy Agency (IEA) highlighted the potential impact of the latest sanctions, noting that they could significantly disrupt Russia’s oil supply and distribution. The agency added that “the full impact on the oil market and on access to Russian supply is uncertain.”

Concerns over the sanctions appear to be bolstering prices, alongside expectations of a potential drawdown in US oil stockpiles this week.

The key issue remains the extent to which Russian supply will be removed from the global market and whether alternative sources or measures can compensate for any resulting deficits.

Meanwhile, OPEC projects that global oil demand will increase by 1.43 million barrels per day in 2026, maintaining a growth rate similar to that expected in 2025.

This forecast aligns with OPEC’s longer-term outlook, which anticipates oil demand continuing to grow over the next two decades. This is in contrast to IEA’s view, which predicts demand will peak within this decade as the global transition to cleaner energy accelerates.

Investing.com — Natural gas prices are expected to undergo a significant transformation in 2025, as per analysts at BofA Securities. 

Analysts suggest that markets are likely to see tightening supply and rising prices driven by factors such as increased liquefied natural gas export demand and reduced production growth in key basins like the Haynesville. 

This aligns with a broader structural shift toward higher demand for natural gas in both domestic and international markets.

According to BofA’s projections, natural gas prices may reach a baseline of $4.00 per MMBtu on the NYMEX, marking an increase from earlier expectations. 

This price increase is underpinned by tight supply-demand balances expected in the second half of 2025. 

The start-up of LNG export projects, such as Plaquemines LNG and Corpus Christi Stage 3, will add new demand, potentially exceeding the ability of U.S. producers to meet this demand with current supply growth levels. 

These facilities alone are expected to create an incremental demand of 3.5 billion cubic feet per day.

The report highlights challenges in production growth, particularly in the Haynesville Basin, which faces structural barriers such as declining rig counts and constrained infrastructure development. 

The analysts note that production in the basin has been declining steadily, with limited ability to ramp up to meet new demand. 

Consolidation among producers in the Haynesville is seen as a double-edged sword: while it has improved operational efficiency, it has also reinforced production discipline, meaning producers are unlikely to oversupply the market.

Meanwhile, LNG demand and domestic electrification are seen as long-term drivers for natural gas consumption, positioning natural gas as a critical component of energy transition strategies. 

BofA analysts argue that global LNG arbitrage opportunities further strengthen the case for higher U.S. natural gas prices, as international markets remain willing to pay a premium for gas compared to domestic benchmarks.

On the other hand, oil markets face a more challenging outlook in 2025, with BofA projecting an oversupply scenario that could keep oil prices suppressed. 

This dynamic is expected to amplify the appeal of gas-leveraged exploration and production companies relative to their oil-focused counterparts. 

Since gas valuations remain relatively undervalued compared to long-term fundamentals, BofA sees potential for a re-rating of gas-focused equities.

In the Canadian context, the upcoming Shell-operated Canada LNG export facility is expected to provide a macroeconomic boost for Western Canadian natural gas producers. 

Although the full ramp-up of this facility will take time, it is anticipated to tighten the AECO basis over time, benefiting producers like Ovintiv (NYSE:), which was upgraded to a “Buy” by BofA on this thesis.