Wrap – Week Ended 10/08/21



Modestly positive week for the ZLT. Our largest positions are in oily and gassy upstream names and they are making new highs but remain inexpensive. The renewables portion of the portfolio continues to waffle.

Holdings Watch: 

  • Last week we added to one gassy upstream name and re-entered another and then added to two Oil Service plays.
  • The blotter is updated.

Free Stuff Last Week: None

Items of note from The Wrap table below:

  • Frac spreads advanced 1 to 263 (thanks Primary Vision), a new pandemic period high.  We expect less white space in the completions calendar this fall vs 2002 or vs your average holiday season.
  • Oily Stuff:
    • Oil net longs rose to 7.2x from 6.0x. We see levels above 6.0x yielding increased volatility and short term downside risk on normally non-newsworthy but bearish looking items.
    • We continue to expect a new 2021 high for U.S. throughput in the near term (one side or the other of maintenance); note how strong the simple 3-2-1 crack is and then note how low U.S. distillate stocks are heading into winter. We think we are seeing skew to make more distillate relative to normal a little bit ahead of schedule which will be good for price support gasoline levels through winter and setting up well for spring but it's early to say.
    • Crude imports bear watching.
    • We see oil prices as ahead of themselves at this time.
  • Gassy Stuff:
    • The natural gas storage injection was well above the Street but within a Bcf of our point target.
    • Only modest short covering occurred for natural gas. Speculators remain very net short.
    • Gas directed rigs are flatlining. Gas growth is expected to come increasingly associated volumes, especially in the Permian (New Mexico gas has been up, up, up of late) and in the Haynesville where tight differentials and high prices are increasingly prompting DUC draw downs and will likely push rig counts higher near term. Conversely, we see Appalachian growth as remains low to flat depending on the play due to pipeline constraints and the resulting wide diffs that region is seeing.
    • Natural gas storage, given recent mild weather (last week's build was a record for this week of the year on poor power burn and R&C demand), is likely to end up in the upper half of our long held end of season range of 3.4 to 3.6 Tcf.
    • This coming week look for a significantly smaller build on the much warmer than normal temps.
    • We saw the start of the expected mark-to-reality this past week with a number of firms upping price decks well beyond just the 3Q mark to market.  Our sense is that the next two weeks will see a lot more of this action.
      •  Sidebar: No one should have trouble with borrowing base redeterminations this fall.
    • We see natural gas prices as well ahead of themselves at this time.
  • We view upstream equities (well, at least the ones that we own) as far from adequately discounting prices well below current levels.

Questions about the site?  Contact Zman@zmansenergybrain.com. 

Questions under The Wrap will be addressed in the Subscriber Mailbag section of the Monday Post. 

Have a good weekend,



14 Responses to “Wrap – Week Ended 10/08/21”

  1. 1
    crysball Says:

    Disruptive Geothermal Drilling Technoogy


  2. 2
    Zorgnak Says:

    S&P Futs
    Daily Chart Weak bounce so far, back into the monthly range from Value area low 4383 key support..4477 to Value area high/resistance… Noisy Chop zone ahead of earnings..
    Glass half full, managed to stay in value for the month. A break below 4383 suggests another leg lower…

    60 Minute..Unable to close above weekly value at 4390…Range bound below 4411 for next week. At least the range moved up for the week.

  3. 3
    Zorgnak Says:

    WTI Weekly Strong weekly up trend on increasing demand volume….

    Daily Price moving through a very low volume (little supply) Friday saw the highest one day demand volume on the chart but Friday was the narrowest range day in the past 7 days.
    Looks stretched…IMO….Stretched can get more so of course
    Upside target has been 81.90…Close…

  4. 4
    Zorgnak Says:

    Strong Uptrend in all timeframes, hasn’t closed below the 5 MA since 9/21..Looks extended but there is a
    volume gap just above that offers little major supply until 17.61.

    Watching 108.21 on the Weekly. Very old supply left over from 7/2019. Not sure it is relevant but again we look a bit extended,
    IMO. Will check back next week.

  5. 5
    Zorgnak Says:

    OIH Strong Uptrend in all time frames. Watching 218, near supply to navigate next.
    Daily Chart
    60 Minute Chart

  6. 6
    Zorgnak Says:

    AMLPs Weekly and daily trends…..
    Daily Broke out. Checked back and is moving up with strong demand volume..Next speed bumps start at mid 36s.

  7. 7
    Zorgnak Says:


  8. 8
    Zorgnak Says:

    Nat Gas uptrend intact on the daily and weekly time frames. Opened tonight above monthly value/support at 5.51. Tested Thursday and Friday…
    60 Minute Opened in value for the week. Range bound between 5.29-6

  9. 9
    Zorgnak Says:

    WTI Opened up tonight. Trend intact in all time frames.
    Daily..Next Upside target at 81.90 insight..
    60 Minute Opened above value for the week at 79.50..now minor support..

  10. 10
    Zorgnak Says:

    S&P Futs Opened down and in value for the month. Short term down trend intact. 4338 monthly value area low is key support…

  11. 11
    Zorgnak Says:

    PBW Clean Energy ETF
    Weekly..Held It’s yearly volume base, barely. Demand volume remains negative in all time frames…

  12. 12
    Zorgnak Says:

    Intermediate downtrend. Bounced at support 91.43 and was rejected at resistance @ 94.44..Demand Volume Negative…
    Longer term uptrend still intact..200 MA rising at 90.26
    Weekly Chart

  13. 13
    zman Says:

    re 1 – 12 – thanks, been on the road this weekend, just back to my seat.

  14. 14
    Zorgnak Says:

    ARRY Last three weeks have seen a large uptick in volume…Last week there were two attempts to break above monthly value….both rejected at the same level….Alert set for 19.02

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