15
Aug

Wrap – Week Ended 8/14/20

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Solid week for the ZLT with the portfolio up nearly 5% on the back of strong renewables and gassy segment wedges. Our oily segment continues to edge higher as well.

The portfolio is now:

  • 53% renewables
  • 20% oily
  • 18% gassy
  • Remainder is cash equivalents and a service name.

We made two changes to the portfolio last week (a fuel cell position add on a deal and a post quarter add to a gassy name).

Wrap Focus:  Natural Gas

We've been writing and speaking to the improving fundamental situation in natural gas since about mid 2019.

  • Net imports had become a negative number (net exports) and that number was growing steadily.
  • Dry gas production growth was slowing and eventually peaked in November.
  • Looking into 2020 we expected falling production and record gas-fired demand, record LNG exports, and a gradual improvement in exports to Mexico as well.

Then we had a very warm winter which rapidly reset storage trough expectations.  This masked the ongoing improvement.

Then we had Covid (which mostly just hit LNG in the form of cargo cancellations but also impacted Industrial and Commercial demand, modestly).

But ...

  • Production has fallen and continues to fall and given lack of investment/DUC activity is going to fall into 2021.
  • LNG hit the floor in July and is now beginning to lift in the latest weekly data.
  • And we are getting that record gas-fired generation year.
  • And exports to Mexico have been resilient throughout the pandemic and of late are tying all time record levels. Expect new ones.
  • As a result, injections in the second half of summer have built more slowly than many expected (high temperatures in the right places have helped with that).
  • And many of the 4.4 Tcf and up type storage peak levels we saw many analysts espouse have quietly been replaced with lower figures. Our own peak storage expectation can be viewed each Monday in The Week That Was section of that post.
  • Finally, the speculative net long position, which started 2020 at nearly 2 to 1 shorts to longs went net long this week for the first time this year (see Wrap below).

and the strip is responding.

We'll have a full Gassy Players update out next week in the wake of the quarter.

Free Stuff Last Week Watch:

 

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

Have a good weekend,

Z

Questions about the site?  Contact zman@zmansenergybrain.com

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5 Responses to “Wrap – Week Ended 8/14/20”

  1. 1
    zman Says:

    Test

  2. 2
    justscott Says:

    Test comment #2.

  3. 3
    justscott Says:

    Test comment 3

  4. 4
    zman Says:

    Iran Watch: Trump says look for snapback sanctions next week.

  5. 5
    zman Says:

    We are streamlining the OPEC section of The Week That Was for ease of scrolling. OPEC Meeting comments from the first half of 2019 on back will be referenced in August 10th and prior The Week That Was sections.

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