Wrap – Week Ended 3/5/22



Several readers have sent generous donations to the Ukraine Crisis Relief Fund here. The need will be immense.


Solid week for the ZLT up almost 9%.  We are travelling this weekend so this week's Wrap will be brief.

Holdings Watch:

  • We added to two renewables tied names and one completion company name last week.
  • Our top five positions are oily, oily, gassy, gassy, and frac.
  • We have been and continue to be very long - overwhelmingly long oil, natural gas and oil service at this time.
  • The trading blotter is updated.

Free Stuff Last Week Watch:

Notable Numbers from Last Week Watch:

  1. Oil 
    1. The moves in oil, gasoline, and diesel were unwelcome last week in terms of demand destruction.
    2. To be clear, we don't like $100+ oil for extended periods of time. It eats demand. It increases volatility in our long held names. While our long held oily names move towards or into new all time highs, we note they reflect nothing like $100+ oil. Backwardation, yes, but also just disbelief on the part of equity investors. The names we do own in the space have fortress balance sheets and in several cases historic for E&P land forward yields.
    3. Not on this chart but notable, analysts are currently basing their 2022 models on $76.80 WTI. We're lower at $65 still but we do model increments of $10 above (so $75 and $85 and run strip thoughts on request although that gets a little nutty as the models would be iterative on capex and production (for many) where the current strip to be this year's average price.  Regardless, sentiment for our oily equities is positive.
    4. Note the generic 3-2-1 crack is at record levels.  We already expected a short and shallow spring maintenance season.  So we really expect that to be the case now.
    5. We also expect to see increased U.S. crude exports to gap fill a portion of reduced Russian exports (though we see Shell and others buying at steep Urals discounts).
    6. Lastly, note the CFTC non commercial (spec) long to short ratio hit a very high 8.0x.  This doesn't necessarily mean reversal in our view as Russia is causing special case conditions but expect larger volatility around smaller news items with this much of a net long overhang.  Iran news for instance would see more than it's newsworthy share of price volatility would JCPOA 2.0 to be adopted.
  2. Natural Gas
    1. Natural gas up 12% to $5.01 in the States. More notable, the rest of the 2022 strip months are all > $5.
    2. CFTC speculators remain very short.
    3. Storage was in line for the week.
    4. Next week expect a smaller withdrawal but storage is on track for Z4 price deck supportive trough levels as it likely lands near the lower end of our long held 1.4 to 1.6 TCF EOS level,
    5. For reference, the chart below is European benchmark natural gas which ended the week at the equivalent of $69, a record. That's ... Just ...Wow.

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 peaceful weekend,




    11 Responses to “Wrap – Week Ended 3/5/22”

    1. 1
      Anonymous Says:

      Russia attempts to muck up Iran negotiations

    2. 2
      zman Says:

      Ukraine to import #natgas from Poland starting March 6 ~ Reuters

    3. 3
      zman Says:

      Germany moving ahead with plans for a new LNG import terminal ~ Reuters

    4. 4
      zman Says:

      Ukraine shuts down gas storage in the east due to fighting. ~ Reuters

    5. 5
      zman Says:

      re 1 – thanks

    6. 6
      zman Says:

      Natural gas trading at $73 in Europe.

    7. 7
      zman Says:

      re 6 –


    8. 8
      zman Says:

      WTI $125
      Brent $128

    9. 9
      zman Says:


    10. 10
      crysball Says:

      When Elon Musk says we need to pump more oil & gas, should we worry?🙄


    11. 11
      zman Says:

      re 10 – saw that and he wasn’t kidding in my view.

      The Monday post is up.

    Leave a Reply

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