Wrap – Week Ended 1/28/22



Better week with natural gas in the lead on the storm and European and Asian prices.  Also notable for markedly solid progress both gasoline and heating oil leading to some of the best generic crack spreads in several months. We previously expected a short and shallow spring refiner turn and these kinds of strong margins only make that outcome more likely, followed by a move to new pandemic period throughput highs.

Holdings Watch:

Free Stuff Last Week:

Notable Numbers from the Wrap Below:

  1. Natural gas:
    1. One of the strongest weeks in years. Notably not just for the front month which changed from February to March but more importantly for the 2022 and 2023 calendar strips.
    2. Better than expected withdrawal from storage with the promise of a much larger pull this coming Thursday and another above average withdrawal in the follow week. This bout of colder weather has prompted the Street to reverse course on thoughts of end of season storage their targets are now moving back towards our 1.4 to 1.6 Tcf range, a range we started the season with and have so far left unaltered.
    3. Equities in the space are not yet in full belief of the rising long term strip.
    4. CNX (unowned) espoused a maintenance budget for 2022. We expect at least 15 Bcfgpd more of mid and large cap natural gas centric names to do the same over the next 3 weeks.
    5. No real change in the short position this week. The net position remains very net short.
    6. Not in the table below but also of note, there is some thought in the space that the recent dip in dry gas production is not entirely due to well freeze ups and CNX spoke to this thought on their 4Q call.
  2. Oil:
    1. Price advance trickles higher on supply concerns and thoughts of rising demand.
    2. We get the OPEC+ meeting on Wednesday.  We expect a rollover of the 0.4 mm bopd monthly decurtailment program.
    3. Crack spreads > $22 per barrel. Very strong for recent history.
    4. CFTC data showed no further jump into danger zone territory (above 6x in our view).
    5. We see as ahead of itself at this point and see the oil tied upstream equities as performing better with a bit of sideways trading in oil and products.
    6. We look for a move up in exports near term.
  3. Renewables - no relief yet. U.S. policy indecision and inflation and supply chain concerns continue to weigh on the group. We expect the next few weeks of 4Q21 reports to provide great clarity on a group that has been painted with an overly broad brush.


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

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Have a good weekend, Z





One Response to “Wrap – Week Ended 1/28/22”

  1. 1
    zman Says:

    March natural gas up 8%, > $5 again.


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