09
Mar

Wrap – Week Ended 3/8/13 (In Progress)

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Strong Week For Natural Gas. Natural gas prices moved to 2013 highs on another larger than expected withdrawal number, building on the strength of the prior week which itself was driven by the December dip in production levels, still strong demand levels, and still weak net imports. Storage will cross the 2 Tcf mark with this coming Thursday's report and we are likely to trough for the season at or somewhat below the 1.9 Tcf level setting up fairly good sentiment for natural gas as we head into the slack time of the first shoulder season.  With the Strip now approaching $4 talk will turn to gas to coal fired switching and while we expect less robust growth this year for gas-fired generation due to modestly higher prices relative to 2012 we didn't see a big switch last Fall when gas prices touched on the $4 mark and coal prices haven't gotten a lot cheap since then. In our view, a lower trough is nice but the more important factor for gas prices remains the directionality of supply (production plus net imports) relative to demand, which remains favorable / constructive.

Strong Week For The Portfolios.  Leadership names continue to outperform with a number of new cycle highs and a few new all time highs notched last week. Gassy stalwart strength broadened out to more names including SWN (where the pending Brown Dense JV has been improving investor sentiment since the 4Q12 call) and that strength is moving down into some of the turnaround and gassy-getting-oily-but-still-quite-gassy names also held in the ZLT.  On the oil side, Bakken leadership names continue to perform well YTD. As noted earlier this week, the ZLT remains between 25 and 30% exposed to natural gas. The ZLT Blotter is updated (we made no changes to the portfolios last week) and since most things moved up last week the pie chart on the ZEB Positions tab is still accurate though will be update it for the Monday post.

Be sure to follow us on Twitter (keyword Zmansenrgybrain) and at Seeking Alpha here and if you don't subscribe to our site feel free to as questions about us via email at zman@zmansenergybrain.com or just take the plunge by registering at upper right and then choosing one of the currently highly affordable options on the Membership Options page.  And have a great weekend. 

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