Wrap – Week Ended 12/03/21



Mixed bag of a week with OPEC+ opting to carry on at the 0.4 mm bopd per month de-curtailment rate, surprising most watchers including us although we thought there was an outside chance they would move to a 0.2 mm bopd increase.

  • At the time of the announcement we noted this as a bullish event. It was muted by later in the week by the revelation of further spread of Omicron.
  • Omicron is now seen as a Covid variant that is potential more transmissible but so far, as noted by the WHO, not tied to any deaths.
  • So we've got the long anticipated announcement of a coordinated multi-national SPR release and OPEC+ checked off the oil price concerns list.
  • This leaves better understanding of Omicron and the Iran JCPOA negotiations as items that the market still will have to consider into year end.
    • If Omicron replaces Delta as the dominant strain it may not be a bad thing. And OPEC+, in a rare move, left the meeting unclosed to watch events unfold.
    • As to Iran, the negotiations were suspended on Friday with Europe saying Iran's demands are too high and that the country has put its nuclear program on a faster track. Both items will need to be addressed before either an interim or restarted JCPOA are likely to be agreed upon.

Holdings Watch:

  • We added to one of large oily upstream positions.
  • We sold the rest of our ENPH position, as per "Sold the second half of our ENPH position at average $245, up 63% to our remaining average cost. Profit protection as noted with the prior sale. We will look to reload this much liked name lower."
  • We added to a niche EV player position.
  • The Blotter is updated. 

Noteworthy numbers this week:

  • Watch the oil rig count begin to plateau or at least grow less slowly.  We've moved from a period of DUC burn to stable state, logistically needed DUCs for the current spread.
  • Frac spread rate of increase should as well.
  • Our view is that the move in the oil price strip is a bit overdone to the down side now, this after months of saying it was ahead of itself. But, we are in the heart of 2022 planning season and the events of the last two weeks should reinforce the concept of maintenance for most oily upstream U.S. names.
  • CFTC now back below 6x long to short. We view levels above 6x as often leading to outsized moves to the downside on even modest news.

Questions and comments under The Wrap will be addressed in the Subscriber mailbag section of the Monday post.

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

Have a good weekend,



7 Responses to “Wrap – Week Ended 12/03/21”

  1. 1
    zman Says:

    Natural gas dropped a stunning 25% to close last week at $4.13 on super mild weather.

    We have long said prices were ahead of themselves.

    Our medium term view has been that 2022 and 2023 strips should be > $3.75 and > $3.25 respectively (this is in The Week That Was each Monday) and those strips are now backed off to $3.90 and $3.46 respectively. 

    While the front month is still a bit elevated in our view the strip is in better, more believable shape now, and the gassy upstream good should be both buyable and tradeable now.

    We have been holding off on adding more gassy exposure and were forced out of GDP (now unowned) in the previous week.
    Look for adds soon. 

  2. 2
    Anonymous Says:

    Nat Gas Coming into more substantial support starting at 3.96 and then again at 3.67. Selling volume tailing off on Thursday and then again on Friday. Longer term uptrend still intact (above rising 200 MA)…

  3. 3
    Zorgnak Says:

    Bill..Haven’t forgot you. Big storm here knocking power off and on all day..

  4. 4
    zman Says:

    re 3 – Blizzard?

  5. 5
    Zorgnak Says:

    Mauna Kea and Mauna Loa are getting a blizzard now…high winds and heavy, heavy rain here…

  6. 6
    zman Says:

    Stay safe.

  7. 7
    Bill Potter Says:

    Hi Zorg,

    I appreciate the help.

    Acceptence and value make sense. I’ll start going through the https://verniman.blogspot.com/2013/07/using-market-delta.html stuff.

    Is there other good out there I can go through?

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