Wrap – Week Ended 8/7/20



Nice week with the ZLT ending up 11.7%. 

  • We are now 53% renewables / 18% gassy / 20% oil
  • We own 15 energy names, down one position from last week, as we removed our "risk" gassy trade GPOR from the portfolio.
  • We remain very long.
  • We made three changes to the portfolio this week (two of them related to GPOR and one to bolster one of our Gassy Core names).   Please see the updated trading blotter here.

Gas in Focus:

Natural gas put on a show rising a whopping 24% last week as more traders appeared to wake up to the improving fundamental story here, a story we've been highlighting since late last year as on the mend but masked at first by a very mild winter and then by Covid and the drop in LNG exports (now bottoming).

  • We expect a larger storage build next week followed by a smaller one the week after.
  • The speculative position in natural gas is again at the least net short level (most long) of the year now at 0.98x long to short vs 0.95x last week and 0.52 at the start of the year.
  • The 12 month strip was up ~8% last week ending the week at $2.75 (see chart below)
  • We own 3 gassy core positions at this time.
  • One trading firm executive on twitter simply replied to one of our comments on Monday's large rally that set things moving a little more quickly that it would "all be given back by Friday".  Nope.

Free Stuff Last Week:

Questions and comments under The Wrap will be addressed in the Monday post.

Questions about the site can be addressed to zman@zmansenergybrain.com


7 Responses to “Wrap – Week Ended 8/7/20”

  1. 1
    zman Says:

    Oil Rigs – Free fall transitioned to trough
    Oil rigs down 4 last week (-396 last 21 weeks)
    Horizontal rigs down 5 last week (-502 last 21 weeks)
    Permian rigs down 2 last week (-301 last 21 weeks)

  2. 2
    zman Says:

    Oil rigs dropped 4 to a new cycle low of 176.

    More importantly, frac spreads retreated by 6 to 70. We repeat that LBRT forecasts the U.S. needs 190 to 200 spreads next year to maintain end of 2020 production levels.

  3. 3
    crysball Says:

    Sad….but true:
    Venezuela’s official Rig Count falls to ZERO….was 1 for months prior.

    Libyan oil production at 100,000 bond , and will likely remain there for rest of 2020 , per oil & gas journal.

  4. 4
    zman Says:

    re 3 – thanks. Election may change/boost all of those and Iran.

  5. 5
    crysball Says:

    With the glut of distillate fuels in the US, …….why are we importing 7 million barrels of RUSSIAN fuel oil in July?


    I understand it is being used as refinery feedstock, but why not use Canadian heavy or some of the heavier Mexican grades?

  6. 6
    zman Says:

    re 5 – for use as heavy oil which was in light supply due to OPEC curtailment. Canada shut in volumes too. Mexico I understood we took all we could but it’s not as heavy. VZ also shut in.

  7. 7
    zman Says:

    Story I read on this yesterday also noted the number is likely to back off in August as OPEC adds back some heavy this month.

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