Wrap – Week Ended 2/4/22



Positive week with the ZLT ending up about 6%.  Oily names and the natural gas centric names performed well on the back of oil's strength and natural gas' long term strength last week.  Our oil service wedge of frac and broader oilfield service continued to perform better than the segment or energy in general.   Renewables found a little traction. 


Free Stuff Last Week:

Holdings Watch:

Numbers from the Wrap below that matter:

  1.  Oil
    1. Strong performance for the front month but also for the 2022 and 2023 strips.
    2. The generic 3-2-1 crack remains in very strong territory.  Given natural gas prices it needs to. 
    3.  Oil directed rigs are rising gradually as expected.  Geographic shift to Williston ramp vs Permian ramp may be starting due to relative crude differentials being better in the Bakken now but would not expect growth to get carried away given inventory situation. 
    4. Active frac spreads are slowly rising as expected in 1H22.  
    5. Non commercial Nymex net longs resumed edging higher and at 7.5x long vs short are in elevated territory that can lead to downdrafts on the hint of negative news (for instance a pop up Iran nuclear deal). Worth watching but not super high yet. 
    6. Throughput may be lower this week on weather but we continue to expect a shallow and short maintenance turn and then a move to new pandemic period highs. 
    7. OPEC+ did as most expected last week hiking output levels by 0.4 mm bopd and the real numbers to watch have become the OPEC+ production to speed limit gap, now at > 0.8 mm bopd.
  2. Natural Gas 
    1. The front months eased but note 2022 and 2023 strips continued to advance. Street estimates are well below Strip now, closer to $3.95 and $3.56 respectively.  
    2. Storage withdrawal was large for time of year but not uncommonly so. 
    3. Storage for this coming week is lining up to be a > 200 Bcf withdrawal. 
    4. The net short position looks like it wants to erode in front of the promise of a higher summer demand season (LNG and power should remain lofty vs year ago) and thoughts of a now lower EOS for storage.  Domestic growth may see some impact from ethane recovery as well.
  3. Renewables ... didn't fall last week with California providing a little much needed traction for residential tied solar and U.S. tariff news helping to buoy utility scale growth thoughts.


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

Questions about the site may be addressed to zman@zmansenergybrain.com

Have a good weekend,



    3 Responses to “Wrap – Week Ended 2/4/22”

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      andy moore Says:


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      re 1 – please check your email.

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