Company: SRV
Filing Date: 2025-08-08
Form Type: N-CSRS
Source: 0001398344-25-014835
Chunk: 2

Company: NXG Cushing Midstream Energy Fund
Filing Date: 2025-08-08
Form: N-CSRS
Chunk 2
---
 the sector’s resilience quickly reasserted itself, supported by robust free cash flow, strong balance sheets, and strengthening natural gas fundamentals.

Midstream equities, as measured by AMEI, rebounded sharply in January, briefly exceeding 10% gains. Optimism was fueled by the anticipated implementation of pro-energy reforms under the new Trump administration, including the declaration of a national energy emergency, the reversal of restrictive regulations on fossil fuel development and liquefied natural gas (“LNG”) exports, and formal withdrawal from international climate agreements. These actions created a highly favorable regulatory backdrop, positioning companies near key U.S. production basins to benefit directly from accelerated LNG and pipeline infrastructure approvals.

Natural gas demand remained a bright spot. Its role in power generation and industrial resilience continued to grow, while the explosive growth in power consumption forecasts for AI-driven data centers introduced a powerful, long-duration demand driver. The proposed $500 billion Stargate project, backed by OpenAI, Oracle, and Softbank, underscored the scale of the opportunity. Over the next five years, some forecasts call for more than 100 GW of incremental U.S. power demand, effectively doubling current levels by 2030.

Although China’s DeepSeek AI model briefly raised concerns around improved energy efficiency for developing AI models, those fears faded quickly. U.S. tech leaders – including Meta, Microsoft, and Amazon – reaffirmed their infrastructure buildouts. Improved efficiency appears to be accelerating adoption rather than capping power demand. We believe these dynamics further reinforce the long-term growth case for natural gas infrastructure.

Tariffs emerged as a meaningful market disruptor later in the period. The administration’s “Liberation Day” tariff package exceeded expectations in both scope and severity. Markets reacted swiftly: the S&P 500 posted its fourth-worst two-day decline in 75 years, volatility surged, and credit spreads widened materially. Although energy commodities such as crude, refined products, and LNG were explicitly exempted, the broader implications for global trade and economic momentum reintroduced significant uncertainty.

The OPEC+ group (“OPEC+”) compounded the pressure by announcing plans in April to reinstate 411,000 barrels per day of curtailed production beginning in May 2025, nearly triple market expectations. Coupled with renewed trade concerns, this move pushed WTI crude prices into the low $60s per barrel, approaching

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uneconomic levels for many U.S