Wrap – Week Ended 08/26/22



ZLT up 3.5% on the week last week, in line with the wider energy benchmarks, with broad markets weighing on the week on Friday with Powell's hawkish language.  The ZLT continues to toy about at HOY.


Free Stuff Last Week:

  • None - we have a couple of pieces in progress for SA.

Holdings Watch:

Numbers of Note from the Wrap Table below:

  • Oil:
    • The EIA weekly was positive side of neutral as weeklies go but some note was made again over slack implied gasoline demand. Also note for a second week EIA ratcheted back their estimate of L48 oil production by 0.1 mm bopd ... trying to align the WPSR with the STEO after recent weekly "enthusiasm". They don't have this kind of granular data but it's positive to see them get a little more real in the wake of paltry 2Q public co growth and that May data which was a lot lower than the weekly suggested (even if part of that is a maintenance dip in the GOM).   Please see the slide show in Thursday's post here. 
    • The basic 3-2-1 crack continues to reside in very strong, historically speaking, territory but is off the nutty high summer levels set in early July.
    • The oil directed rig count is, as expected, making slow progress in recovering.
    • Frac spreads rebound after a month of retreat from the post pandemic period peak of 295, adding 7 to reach 287. We expect modest uptick in the rest of 3Q to pre Thanksgiving period.
      • Our contacts in the frac and sand spaces see about a 10% increase in horsepower in 2023.
    • Note the dip in non commercial net shorts in the CFTC section of the table below.
    • JCPOA 2.0 continues to be a wild card on the market and we'd expect some negative reaction in prompt and strip on the day something does get done if it gets done.  A deal looked a little more remote again as we headed into the weekend with several parties talking tough (Iran, IAEA, US).
  • Natural Gas:
    • The long term strip continues to advance.
    • We saw a cycle high move in European prices this week.
      • At week's end Dutch prices were the equivalent of $107 per MMBTU.
        • It's literally blankets and firewood time and more price caps are going to be expanded and consumers are going to have a tough time.
      • We saw one of the biggest flares on record across the Baltic from Finland as NS1 continues to restrict flows.
    • The U.S. storage build hit the high end of our expected range.
      • We expect a slightly larger build this season.
      • We see no reason to modify our EOS mid point target at this time which has been unchanged since the start of the year at 3.425 Tcf.  If anything, there is downward bias to our range.
    • The shoulder season is approaching and we expect a more modest than usual season pull back as Europe and Freeport loom and as U.S. production is only making grudging advancement.
  • Renewables:
    • Solar and wind largely continued to take a breather in the wake of the IRA signing.
    • Wind may be seeing the first real hiccup for US offshore over performance guarantee issues but it's unclear yet if the threat of a big project cancellation (threat, not actual) is more part of the bargaining process or not.

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

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

Enjoy your weekend,



12 Responses to “Wrap – Week Ended 08/26/22”

  1. 1
    crysball Says:

    Exxon sells entire Fayetteville Shale position to private Flywheel Energy……360.000 acres, 850 operated wells, approx 4,100 non-operated, plus gathering & processing facilities.

    Exxon considers Fayetteville non-core…..no pricing info available….they paid $650 M for it in 2010.

  2. 2
    zman Says:

    re 1 – we had thoughts on this on twitter yesterday:


  3. 3
    Zorgnak Says:

    Broad Market..
    Daily Rejected acceptance at 4145 as too high with a break of support at 4112. Entering a low volume (high volatility) zone between two major acceptance levels at 3900 and 4145. Downside target and minor support at 3974. Bulls will want to see a bounce or at least a pause around 3974. 3900 next previous major acceptance and support should 3974 give way.
    Weekly Closed below longer term value area lows. Demand volume negative in all time frames now. Market needs to close above 4110 to break resistance on both the daily and weekly time frames.
    Breadth Rolling over now. Summation index crossover on the NYSE and Naz

  4. 4
    Zorgnak Says:

    Energy sector.
    Low volume pullback on Friday after becoming short term overextended. 10 consecutive days of relative out performance vs S&P.
    65 Minute

    Consolidation between 81.71 and 84.07 around previously untested supply at 83.58. A break below 81.71 targets price/volume gap move to 79.17 with additional support at 77.78. Break of 84 has little supply until 88.50.
    65 Minute

  5. 5
    Zorgnak Says:

    Same basic look as XLE, high relative strength for the past 10 days followed by a low volume pause on Friday…Numerous areas of potential support below. 141.85 would be a place to pay attention, if/when.

    65 minute.
    Consolidated the week’s up move. A break below 146.11 has a price/volume gap to fill at 142.91/support. Additional support below.

    Weekly…High volume up week for XOP…Next longer term upside target at 166.

  6. 6
    Zorgnak Says:

    Traded up to first target and defined resistance and heavy supply at 255. Major support at 238-241.

    65 Minute
    Has some work to do here. A move above 257 has room to move into the first gap above resistance if/when. Trading in the low volume/high volatility zone. Value gap/support at 238 below if things get whippy.

    Weekly High relative strength vs the S&P last week. Above average demand volume. Nascent uptrend intact testing major resistance…Demand volume turning positive since the break above it’s longer term volume base.

  7. 7
    Zorgnak Says:

    Consolidation around previous major acceptance at 86.30. Value area highs/lows, support/resistance at 88.54/82.96. A close outside that range has room to move in whichever direction the break occurs.. Note the sizeable price/volume gap below the current value area.

  8. 8
    Zorgnak Says:

    FAN Tested first major resistance after the Manchin bill news…Range bound now but near the value area lows. Big price volume gap below the VAL if/when it breaks much below that level. (11.22).

  9. 9
    Zorgnak Says:

    WTI Trading around long term acceptance at 92.64. Value area highs/lows on the chart. Waiting for a catalyst to break value range.
    65 Minute
    Value getting built higher since the lows around 86.
    Watching of previous acceptance/resistance at 95.23. Room to move above that level, if/when.

  10. 10
    zman Says:

    In tomorrow’s post:

    ~ The Week That Was,

    ~ The Liquids Rich Gassy Players Update (AR, CHK, RRC, and SWN) (archived under Gassy).

    ~ The Five Things,

    ~ and some other odds and ends.

  11. 11
    Zorgnak Says:

    Nat Gas Continues to build choppy acceptance around 9.28 CHVN Near support at the LVN at 9. Breakout setup above 9.71. 2 High volume down days last week…
    Weekly Highest weekly volume of the year. Looking like it needs a rest?

  12. 12
    zman Says:

    Thanks for the levels Zorg.

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