11
Jun
Wrap – Week Ended 06/10/22
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At week's end, the ZLT was off 1.1% on week having tapped a fresh high of year on Tuesday before retreating with broad market inflation based concerns. Broad markets fell 5% and most energy benchmarks were down as well. Natural gas and oil themselves shrugged off concerns particular to each and renewables were mixed despite positive news on the solar front.
Recent Free Stuff:
- Small cap clean frac player
- Subscribers please see Friday's post for a follow up in the wake of Thursday chat with management.
Holdings Watch:
- We added to 3 of our 4 solar tied positions in the wake of U.S. tariff relief for panel imports,
- We added to one oil service name multiple times,
- We added to one LNG player in the wake of a sharp drop prompted by the Freeport LNG output interruption.
- The Trading Blotter is updated.
Notable Numbers From The Wrap Table Below Watch:
- Oil
- Refiner throughput hit a 2022 high.
- Crack spreads remain incredibly strong.
- Lower 48 oil production remains tame.
- The frac spread count recovered to the second highest level of the year after the recent holiday. Expect slow going from here but also a new high (> 290) in 3Q.
- Exports dipped but we see that as likely a preparatory move to increase to new highs near term as the record SPR releases continue.
- Although not in the table we'd note OPEC+ is now thought to be 2.79 mm bopd light to quota.
- Refiner throughput hit a 2022 high.
- Natural Gas
- In line storage report last week.
- Export a smaller build this week (heat) but for the deficits to year ago and five year average levels to erode modestly in Bcf terms (rare this season).
- Big news of the week was the Freeport LNG incident and the site is expected to be down for at least 3 weeks at about 2.1 Bcfgpd - not a big deal to EOS as we see other demand partially offsetting.
- Production growth remains tame.
- We note EIA in this past week's STEO trimmed it's growth forecast yet again despite the high rig count and advance in completions.
- As noted on the 1Q22 calls, larger Marcellus players see no reason to move back into growth mode given the lack of incremental basin takeaway capacity.
- Record demand in ERCOT expected next few days,
- We actually continue to see downside bias to our mid point 3,425 Bcf EOS target despite Freeport.
- Renewables
- 24 month tariff relief in the form of an Executive Order is welcome news and makes sense to ensure projects go forward and maximum jobs are protected.
- We saw the expected relief rally on Monday followed by choppy trading created by trapped long selling and later the broad market swoon.
We get the OPEC Monthly on June 14 (look for slight demand hit) and the EIA DPR on Monday (expect further slowing in DUC bank reduction).
Questions under The Wrap will be addressed in the Monday Post.
Question about Z4 Energy Research / Zman's Energy Brain may be directed to zman@zmansenergybrain.com.
Nice to see some progress here.
Have a good weekend,
Z
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Thank you Zman!
Regarding Freeport explosion, I have seen some saying the facility could be down for few months not just 3 weeks (worst case scenario seems to be until October?).
Would this also not be a big deal based on your forecast? Was concerned about this and wanted your opinion!
Thanks,
June 11th, 2022 at 7:53 pmRuss
Z,
The Oaxaca gas liquefication plant mentioned is purportedly a NFE project.
Oaxaca is is not an easy place for foreign companies to operate and PEMEX involvement makes getting paid another hurdle,
New gas liquefaction, coking plants in Oaxaca imply 120 bln peso investment- Lopez Obrador
https://www.reuters.com/world/americas/new-gas-liquefaction-coking-plants-oaxaca-imply-120-bln-peso-investment-lopez-2022-06-11/
June 12th, 2022 at 2:53 pmre 2 – thanks.
re 1 – will address in Monday post.
June 12th, 2022 at 7:11 pmZLT stocks that had broken above previously accepted value and are now pulling back to those levels of potential support during the general market retreat.
STEM .
Daily
https://ibb.co/TLpsdJg
LBRT
June 12th, 2022 at 11:40 pmDaily
https://ibb.co/jkY1nff
Crude Oil Holding above weekly support at 118…Previous lower acceptance was at 116.
June 12th, 2022 at 11:59 pm65 Minute
https://ibb.co/r4D58dk
Nat Gas volatile/range bound within the primary uptrend.
Daily
https://ibb.co/c3TXc9Q
General Mkt Breaking lower overnight…No meaningful support nearby….3687 is the next meaningful level of potential support. Volume gap between here and there. Room to move in either direction quickly.
Futures..
https://ibb.co/6J5RRVj
There is some fear. Note the Put Call ratio spiking to it’s highest level since the 2020 crash
Put/Call Ratio
June 13th, 2022 at 1:02 amhttps://ibb.co/vHrsL5y