14
Aug

Wrap – Week Ended 08/14/21

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Modestly up week despite Friday's attempt to sell everything off.

Holdings Watch:

  • We added to three names after they reported earnings last week.
  • The Blotter is updated.
  • A portfolio rebalance is coming in the next couple of weeks.

Free Stuff Last Week:

Numbers of Note:

  • CFTC oil long vs short non commercials backing away from danger zone. We note this when it runs over 6x as generally you then get a fools rush in and rush out rally on anything that looks like news (extra potential selling power).  Note the lack of a real sell off in crude this week after this backed off again (recent high was > 9x) despite news that two weeks back would have sent crude tumbling (OPEC and IEA forecasts for 2022 negative revisions).
  • The basic 3-2-1 crack remains at a very lofty $24 or about double what it was at year end and $10.15 in the week ago year. This along with solid expected near term product demand and product stocks that are below the five year average should produce another record refiner throughput figure for 2021 (not for all time) sometime in the next few weeks.
  • Natural gas down about 7%.  Good. We've been calling it as overheated. This coming week look for a smaller storage build and storage remains on a bullish track but there is not a lot of reason for prices to be up around $4+, not yet at least. Storage peak and trough won't be record lows, they're set for bullish levels but not records and we are seeing signs of demand destruction over $4. On the equity side, a chilling of gas prices needed to take place as investors are clearly hesitant to buy off on teh commodities move and have really avoided adding to the name during much of it this summer even as the longer date strip has come up (2022 is now $3.48 and 2023 is now $3.02) and many of our names are very much less hedged next year and in the future and many of our names have been very slow to add to 2022 and beyond for awhile now.  AR for instance has not add to its gas hedges in over 16 months.   Also note that cold spikes will likely be met with strong up moves in the winter given the size of the net short position which has so far not covered despite the advance in prices.

Have a good weekend,

Z

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