01
Apr
Wrap – Week Ended 03/31/23
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The ZLT ended up 9.5% on the week last week with all portfolio segments bouncing from recent post quarterly report news deserts that allowed for pressure from bank and broad market related weakness.
A few comments on The Wrap:
- Oil
- Nice rebound week that appears to have begun with a Kurdish flow stoppage (likely resolved this weekend) and gained momentum in the wake of a much better looking set of weekly figures from EIA.
- The big 3 (oil with SPR + gasoline+ distillates) showed a rare for 2023 drop and we note we are out of maintenance season now so bigger product draws may fade but "unadjusted" crude stocks should slip seasonally from here.
- While throughput helped the chart above to fall we also note net imports remain bottom of range or below range YTD ...
- ... and U.S. oil production growth remains tepid with volumes up just 0.5 mm bopd over the last 15 months and still markedly below the pre pandemic peak. Yes, the Permian is reported at new highs commonly but the Permian is not the whole US picture.
- The non commercial shorts had recently built their biggest position in years. Last week saw this begin to reverse (see CFTC highlight below the table) as they ran for cover.
- Refiner margins held up nicely (still upper to mid $30's on the basic 3-2-1 crack) as crude outperformed into quarter end.
- Active frac spreads moved back up to 295, just short of last year's peak. This is needed to maintain, not really grow production. Capacity remains tight, demand remains high (though there is some shifting from gassy to oily basins) and we see the March drop in pressure pumpers as very much overdone to the down side.
- Natural Gas
- We got what was probably the last of the meaningful withdrawals of the season last week, a bit below consensus and a bit above our weekly estimate.
- We think we're essentially at trough now and our peak remains essentially unchanged near 3.8 Tcf.
- Look for our natural gas macro slide show early next week.
- Note the big short cover in the CFTC section of The Wrap table below.
- Freeport LNG hit max capacity this week (2.1 Bcfgpd).
- While Lower 48 natural production continues to hover near record high levels it has held at plateau levels since November (spikes up and down from there since). Few are trying to grow this year. Many are in maintenance or maintenance minus mode.
- Supply however, which is Production + Net imports, is trending lower. Look for higher LNG exports, flattish Mexico exports and flat to lower Canadian imports for 2Q and especially 3Q as YoY comps.
- As such, natural gas remains in our view overdone to the down side.
Holdings Watch:
- Pretty quiet week after a couple of weeks of opportunistic adds to the portfolio. We did add early in the week to the ACDC position.
- The trading blotter is updated here.
- The Positions page will be updated before the weekend is done.
Questions and comments under The Wrap will be addressed either this weekend or in the Monday Subscriber Mailbag section.
Questions about the site can be sent to zman@zmansenergybrain.com
Our home town was hit hard yesterday by a round of storms but the Z4 HQ is safe and we feel blessed to have been unscathed. Thanks for the well wishes. The Salvation Army is taking donations to help their relief effort here.
Have a good weekend,
Z
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OPEC members announce voluntary production cuts.
April 2nd, 2023 at 9:22 amVoluntary Cuts atop the October agreement
From May to end of 2023
Mbopd
April 2nd, 2023 at 9:28 amOman 40
Algeria 48
Kazakhstan 78
Kuwait 128
UAE 144
Iraq 211
Russia 500 (extension)
Saudi 500
Production cuts and CTAs short short…
April 2nd, 2023 at 10:38 amNice mix.
re 3 – indeed
April 2nd, 2023 at 11:18 amBIDEN ADMINISTRATION WILL CONTINUE TO WORK WITH ALL PRODUCERS AND CONSUMERS TO ENSURE ENERGY MARKETS SUPPORT ECONOMIC GROWTH AND LOWER PRICES FOR AMERICAN CONSUMERS, NSC SPOKESPERSON SAYS
BIDEN ADMINISTRATION IS FOCUSED ON PRICES FOR AMERICAN CONSUMERS, NOT BARRELS, NSC SPOKESPERSON SAYS
U.S. NATIONAL SECURITY COUNCIL SPOKESPERSON SAYS DOES NOT THINK OPEC+ PRODUCTION CUTS ARE ADVISABLE AT THIS MOMENT GIVEN MARKET UNCERTAINTY – AND WE’VE MADE THAT CLEAR
April 2nd, 2023 at 12:43 pm🤑🤮🤢$BILLIONS. Stolen from PDVSA in a huge corruption scheme to defraud Venezuela……operated by numerous shadowy crude oil brokers.
https://jamaica-gleaner.com/article/business/20230402/shadowy-brokers-walk-billions-venezuelan-oil
April 2nd, 2023 at 12:58 pmLarge spec short positioning in Brent..
April 2nd, 2023 at 1:49 pmhttps://flic.kr/p/2oqHxei
WTI and Brent up $6
April 2nd, 2023 at 5:32 pmOvvintiv (OVV) reported to acquire Permian(Midland basin) assets of ENCAP…..3 companies controlled by ENCAP
https://www.bnnbloomberg.ca/ovintiv-nearing-deal-to-acquire-encap-s-midland-assets-1.1903629
$4billion deal
April 2nd, 2023 at 9:08 pmHi, this is to follow up on your suggestion on twitter than I ask you here about how it works when natgas producers sell their gas. Considering the steep contango in the futures, seems to me (as an outsider) that it would make sense for them to delay well completions for some months and sell the future production now in advance in the futures market. But you said that is not how it works… So can you please write a bit about how it does work, and the flaw in my suggestion? Thanks in advance!
April 3rd, 2023 at 3:10 amP.S. I hope you and your town are doing ok and getting back to normal after the tornados!