Wrap – Week Ended 5/12/23



Happy Mother's Day! Thanks to my mom for everything from raising us to taking care of dad. You're amazing. Same goes for my wife who is also simply incredible at all the mom stuff she does for the interns.


The ZLT was up less than 1% last week as earnings season ground to an almost end. Oil and natural gas moved in opposite directions, the former moving with economic concerns and a lack of real volume movement from OPEC+ while the latter's demise has long been over exaggerated. More on that below.

Holdings Watch:

Natural Gas Macro:

  • If you missed our recent macro update please see the Natural Gas Macro link at left or click here.
  • We see a lot of chatter from the sellside and research shops pointing to elevated EOS levels and weaker, even from here, natural gas average prices for 2023.
  • We've also noted that many EOS targets have come down from 4.4+ Tcf a few months back to 4.0 or even lower now.
    • We remain near 3.8 Tcf.
  • With that said, 3.8 Tcf is not exactly low but it's not the end of the world either.
  • Our view on prices has long been that while absolute storage levels matter they are less important when they are not extreme.
  • The directionality of supply and demand is more important - its the S/D environment generally tightening or widening?
  • 2022 was a widening year. Production rose rapidly. Exports were constrained mid year by the Freeport incident. Soft demand over winter 22/23 only exacerbated the impact upon storage of too much rapidly added net supply.
  • 2023 is a tightening year.
    • Production has essentially arrived at a plateau and activity is on the wane.
    • Exports are moving to new highs.
    • Demand is set to again hit record levels this summer.
  • Near term storage will see some large-ish injections with the first triple digit one (we think around +105 Bcf) this week.
    • This is the shoulder.
    • This is fine.
  • After that, everything remains on track and barring a no-show-of-a-summer we do expect sentiment, and prices, to improve as we record a series of not overly threatening injections in the June - September period.

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

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


Have a great weekend mom,


One Response to “Wrap – Week Ended 5/12/23”

  1. 1
    crysball Says:

    More US NG to be exported via Mexico LNG?


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