While a lot of people keep their eyes on the news and D.C. to gauge the economy, Dennis Kissler said he also looks toward other, unconventional factors—like Las Vegas hotel occupancy rates and the price of beef.
Kissler, senior vice president for the trading division of BOK Financial, said it’s one good way to track how people are handling their discretionary spending and their comfort level with current economic prospects.
“We’re seeing record-high beef prices,” said Kissler. “We’re seeing a lot of buying of high-end type food products. … That tells me the economy is in good shape.”
Kissler spoke on a panel that discussed “Hedging for Resilience: How Producers and Investors Navigate Price Volatility,” during Hart Energy’s Energy Capital Conference on June 4.
The panelists discussed the current volatility in the marketplace, while the overall prognosis for much of the energy sector, such as natural gas for LNG and electrical generation, is positive.
However, Kissler said many people remain down on their outlook thanks to tariff news and changing OPEC+ strategies.
Thomas Galloway, partner and CFO at Riverbend Energy Group, said determining the proper hedge has been complicated for some of his investors.
“One of the hardest parts of our day-to-day job is managing sentiment like Dennis [Kissler] mentioned, but also preparing a business strategy on top of that,” Galloway said.
Riverbend takes an “aggressive stance” towards managing cash flows from production and redeploying it in later acquisitions and building an exit for the investor at the same time.
“By implementing a robust hedging program, if we can lock in that stream of free cash flow and compound our equity returns, we're doing our job,” Galloway said.
Billy McCartney, founding and managing partner of Wincoram Asset Management, said there are plenty of reasons for investors to be bullish about the future, though the market is re-arranging some factors right now.
Natural gas demand is expected to boom over the next few years to support AI data centers, yet it remains relatively unknown just where all the data centers will be located.
“I’ve never seen a situation like this, in supply and demand balances, where that much demand is coming on when they haven’t set all the chess pieces yet,” McCartney said.
Eventually, the decisions will have far-reaching implications for the natural gas markets—whether that be in Appalachia, the Permian or the Haynesville.
“If someone as a trader says, ‘I know exactly what it's going to be’, they're wrong,” he said. “It's something we'll keep monitoring. It is a bullish setup. It's just a question of how bullish will it be and how quickly can we dispatch all that capital?”