Wrap – Week Ended



First week since the week ended 9/11/22 for DJIA and SPX to finish in the green, ending up on the week 2.0% and 1.5% respectively, but with the Fed still tilting towards sword of Damocles actions the two are down 19% and 24% on the year.


In energyland things were a little different with the groups ranging from up 7% (the gassy names of the XNG) to up 17% (OIH - the oil service sector where analysts and investors have been in our view overly punishing the group on fear of a bad 2023). For our part the ZLT was up 12.1% on the week.

Brief Comments from The Wrap table below:

  1. Oil
    1. Oil and the strip up double digits on the combination of:
      1. a bigger than expected OPEC+ quota cut of 2.0 mm bopd for November and December which translates into a ~1.0 mm bopd actual cut from current group output.
        • We had extensive comments on this in the Wednesday and Thursday posts.
        • Nutshell:  We remember the large but late cuts of 2008 too and agree with the move.
      2.  a bullish looking EIA weekly:
        • Better than Street expected headline numbers
        • Strong internals:
          • with a week to week bounce in throughput.
          • flat week to week production for the L48 at 11.6 mm bopd.
          • resilient exports yielding a new low for this week of the year for net imports.
          • a skew to more distillate make which given low low distillate stocks is a bit overdue.
        • And this which speaks for itself:
      3. Buoyant cracks - note that heating oil price jump and move back over $40 for the simple 3-2-1 crack.
  2. Natural Gas:
    1. Much bigger than we or Street expected build and just short of an all time record
    2. EU prices (not in the table) also down again on the week. This is despite the NS1 & 2 news of the prior week and is likely the result of shoulder season weakness in the US (we've gone from tail wagging dog to dog wagging tail for a bit) and comments from a number of EU countries regarding reaching near full storage ahead of winter.
    3. We are looking for a range of +130 to +140 Bcf for next week's build. Record weekly build is +132 Bcf.
    4. We currently see prices as ahead of themselves (note the 2023 strip was up last week) from a short term stand point and are looking for further declines in the shoulder to increase exposure in the gassy space ahead of the restart of Freeport LNG in November and the heart of U.S. cold weather in January/February.

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

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

3Q22 reporting season begins in 2 weeks. Come see us.

Have a great weekend.


Re Question #1.  Priced Thursday night. 

4 Responses to “Wrap – Week Ended”

  1. 1
    Bill Potter Says:

    Z, why is AR so weak compared to CHK?

  2. 2
    zman Says:

    re 1 – see graph added to bottom of post. I assume you are referring to very recent performance.

    We owned RRC until two weeks ago, sold for 48% gain (so the chart now says unowned).

  3. 3
    Denis Says:

    Much bigger what?
    “Natural Gas:
    Much bigger than we or Street expected build and just short of an all time record”

    And whatis on the graph below under that paragraph?

  4. 4
    zman Says:

    re 3 – much bigger than expected storage build.

    The injection (build) was 199 Bcf and Street consensus was +116 Bcf.

    The graph is natural gas storage levels in Europe. Prices in the EU continued to fall as storage levels reached relatively safe levels ahead of winter.

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