Wrap – Week Ended 01/20/23


The ZLT was down 3.5% last week in the wake of the prior week's 14.4% bump higher (we're up 3.2% on the year). Our oily and gassy upstream wedges were resilient while oil service and renewables saw a little profit taking. Noise in our view. We added to two positions to take advantage of the pre 4Q report period dip.  SLB (unowned) reported a beat and reiterated (and in our view extended) strong macro commentary with NAM set to grow solidly again (but moderating) and international set to further accelerate (especially offshore and the Middle East). All in all the quarter was largely ahead of expectations (although they missed on free cash flow) and sets a good tone as the reporting season heats up next week. Please see our calendar of 75 names (27 owned, the rest of constant interest) on the calendar link at left. Look for the first iteration of So Far This Quarter middle of next week.

If you're not a subscriber we suggest taking a one month test drive.  It's pain free. There are no dumb questions on this site and it's exactly like having a sellside analyst with portfolio management and banking experience on standby.  We're through 1 of 75 4Q22 updates and conference calls we will be on (some on replay, it gets nutty busy mid Feb). If you glance to the running list of posts at left you'll note we've been doing this, 6 days a week, for quite some time. 

Holdings Watch:

  • We added to one solar tied name (gap fill dip) and one sand name (spoke with management) last week.
  • The blotter is updated. 

A few brief comments on The Wrap table below:

  • Oil
    1. The last three EIA weeklies have been skewed by noise in the numbers from Winter Storm Elliott. Prior to year end refiner throughput was tracking modestly ahead of year ago levels. The last 3 reports have seen a cumulative 25 mm barrels less crude refined. To those shorts pointing to the big YTD builds we note this impact, the big drop in exports two reports back (also Elliott), and some normal tax related swing in inventories back to the U.S.  ... calm down, it'll sort itself lower within a few months.
    2. The SPR showed no change last week for the first time since the big Biden Administration price control 180 mm barrel release announcement.  Without SPR support and with rebounding refining ... good luck sustaining crude inventory beyond the spring refiner maintenance turn. For perspective, see the two dots of 2023 below left.
    3. Speaking of refiner throughput, note:
      • Distillates are at just 80% of 5 year average levels. They've been understored for quite some time but this is near the relative lows.
      • This has yielded a simple 3-2-1 crack > $40.  That's. High.   Look for refiners to get back on the job soon to take advantage of this and to rebuild both products (gasoline is at 92% of the 5 year average and a few people still don't drive EV's).
    4. Active frac spreads are in line with this time a year ago.  SLB call color suggests more drilling and DUC rebuilding in 1H23 with a more crowded completion schedule in 2H23.  Frac capacity is very tight.
    5. The front of the WTI strip has taken on a more interesting posture since the start of the year.

  • Natural Gas
    1. Price sentiment is weak.
    2. Watch EU prices.
    3. Watch the Freeport LNG website for news soon.
    4. The weekly storage report of -82 Bcf compared to Street average of -74 Bcf and our "around -80 Bcf" estimate.
    5. Due to the cold December and despite the mild January stocks are in OK territory at present.
    6. Please see our slide show in yesterday's post.
    7. If you don't have access please see this instead.

and this


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

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


Have a good weekend,



2 Responses to “Wrap – Week Ended 01/20/23”

  1. 1
    zman Says:

    Early read on next week’s storage:

    Consensus: -78 Bcf / Z4 > -90 Bcf
    Last year: -217 Bcf
    5 Yr Avg: -185 Bcf

  2. 2
    crysball Says:

    3rd FLNG terminal for Europe arrives in Germany . it’s 1st cargo will arrive for regassificaion by the end of JAN:


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