Wrap – Week Ended 07/08/22



The ZLT ended the week down 0.4% on the week. Energy benchmarks ended down from 1.8 to 3.5% on the week. The week was a short one with a soft start and a better end after a series of oil price stops were run on Tuesday. We started dip buying on Wednesday (see Holdings Watch below).  Our sense is the group is bottoming ahead of the 2Q22 reporting season. To reiterate:  Everyone of size who was in "maintenance mode" exiting 1Q22 will very much be in "maintenance mode" as they speak to the rest of the year in the coming round of calls. That's all the big public gassy and oily upstream players.  Look for the first edition of our 2Q22 energy earnings calendar this week. As usual we plan to be on 55 to 65 quarterly calls.

Recent Last Week:

Holdings Watch:

  • We added to two oily players, CIVI and MGY last week and two smaller oil service names.
  • The blotter is updated

Numbers of Note From The Wrap Table Below:

  1. Oil
    1. The EIA WPSR was positive-side-of-neutral as weeklies go with the big build in crude occurring due to a confluence temporarily weak exports and stronger than recent imports and another large SPR release. The SPR is now down 21% or 129.3 mm barrels YoY while oil commercial inventories are up 5.9 mm on the year vs down 40 mm through the first half last year. That's a lot of SPR release for not a lot of recovery in stocks. Please see Friday's post for the oil inventory slide show.
      1. Throughput ebbed but only to the 2nd highest level of the year.
      2. While much noise in the press has focused on the "exporting of the SPR" we note that combined product exports, excluding oil, hit an all time record last week.  Europe and LAM are structurally short refining capacity.
    2. The Nymex non commercial (speculators) net long position fell below 6.0x for the first time in 27 weeks. Generally we expect greater potential for outsized moves on modest news when this is above 6x.
    3. Frac spreads dipped 2 weeks ago on the holiday and are reported as flat this week. Capacity is extremely tight. We expect to see a new 2022 record soon, passing the 290 mark, but only barely. Look for a series of strong reports from the frac group in 2Q22.
    4. Other Items:
      1. We get the July OPEC MOMR on Tuesday.  This will be OPEC's first forecast for 2023 and we expect to see >,= 1.5 mm bopd growth relative to 2022 demand levels. Look for non OECD countries to accelerate and OECD to grow but at a lessor pace.
      2. We get the EIA STEO on Tuesday.  Potential for a modest contraction in their forecast oil growth for the U.S. is elevated. This thought is based on the way their model works (rigs and price assumptions and not actual completions balanced with the monthly data).  Recently weekly data has shown output of 12.1 mm bopd in the WPSR while the most recent monthly data emerged last week showing U.S. volumes down at 11.4 mm bopd in April. Hard to see an implied jump of that size carrying the model higher so we'd expect a flat forecast at the very least if not slightly down.
  2. Natural Gas
    1. Smaller than expected injection last week and we expect a modestly smaller report this coming Thursday.
    2. Storage continues to track in line with our as of yet unchanged EOS range.
    3. Speculators remain exceedingly short.
    4. Daily production, not included in the table below, continues to inch higher but just inch, with last week's dry gas production level at 96.0 vs around 95 at the start of the year (excluding early year freeze offs that saw volumes dip into the 93-94 Bcfgpd range).  Point is, not much progress.
    5. Also not in the table below, LNG export volumes moved back to near maximum-capacity-less-Freeport averaging 11.2 Bcfgpd last week.
      1. Sidebar:  We see odds at slightly better than 50/50 that Cheniere is granted a temporary pollution waiver.  Without an exemption meeting the Administration's goal of providing an incremental 15 BCM in the last 9 months of the year to Europe will prove exceedingly difficult in light of Freeport.  Given the Administration's recent move to aid domestic solar installations via an exemption of customs probe we give the edge to temporary leniency here as well.
      2. We're seeing LNG deals being penned for both fast track and long term on a somewhat regular basis now.
  3. Renewables
    1. Broad renewables group bottoming continues.
    2. Scares in the solar segment (looking at Roth for these) are being shrugged off more rapidly than in 1Q22.
    3. Wind remains becalmed.

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

Questions about the site may be directed to zmanalpha@gmail.com or zman@zmansenergybrain.com

Have a good weekend,



8 Responses to “Wrap – Week Ended 07/08/22”

  1. 1
    crysball Says:

    A ‘fluff’ article on QS……..NOT ANYTHING we don’t already know.


  2. 2
    crysball Says:

    Explosion & Fire at ONEOK. NGL plant in. Medford, OK
    All evacuated within a 2 mile radius of the plant


  3. 3
    Anonymous Says:

    Broad Market..Record shorts going into next week..

  4. 4
    Zorgnak Says:

    Long term view of net positioning…Approaching 2020 lows..

  5. 5
    crysball Says:

    Stripping government agencies of regulatory willfulness .

    This should have interesting implications going forward.


  6. 6
    Anonymous Says:

    Sunday Night
    Nat Gas Up $5 after rejecting previous acceptance, long and short term support at around 5.50, as too low. Trading in a low volume zone below defined resistance at 6.92. Demand volume and relative volume weak.

  7. 7
    Anonymous Says:

    Crude Oil
    Increasing acceptance of 100+.
    Currently rotating around previous long term acceptance at 101
    Daily Gained back 1/2 of the latest correction and is once again trading above recent acceptance at 102. Choppy/congested range trading between 102-109, support/resistance.

  8. 8
    Crysball Says:

    Stripping government agencies of regulatory willfulness .

    This should have interesting implications going forward.


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