Wrap – Week Ended 6/9/23


The ZLT was up 0.9% on the week last week as the upstream and service groups tread slightly higher while renewables took the week off. 

Holdings Watch:

Last Week's Posts:

A few comments on The Wrap table below:


  • Oil retreated modestly in the wake of the OPEC+ meeting. We view this as short term noise. 
  • The WTI speculative long vs short ratio remains highly contracted at 2.3x.  Look for this to shift higher (more longs and less shorts) this summer. 
  • The basic 3-2-1 crack spread has been strong for awhile now and ramped higher last week. We continue to look for near term positive year over year comps for throughput.  Throughput set a new 2023 high in last week's EIA report and the YoY deficit on refining, in place due to early year poor weather, continues to contract. 
  • Implied gasoline demand is 1% above year ago levels YTD while distillates, soft all year, are expected to play catch up this summer. 

Natural Gas

  • The storage report of +118 Bcf (implied flow) was in line with our range of +115 to +120 Bcf and a bit above the Street's +113 Bcf. 
  • July contract prices failed to ease on the week as summer heat approaches and we note ICE LD1 non commercials continue to show a sharply improved stance from the early year long short ratio. Further, there are still plenty of shorts in place to cover later, higher, in our view.  
  • Next week we're looking for a build around +95 Bcf. This is aided by a move to a new 2023 high for power burn as natural gas continues to take generation share and move well beyond total demand. 

  • Storage is slightly below were we thought it would be two months ago and we remain on track for a 3.8 Tcf EOS.
  • We continue to see prompt and strip natural gas prices as overdone to the downside and see the group starting to bottom as supply/demand conditions become more favorable on a YoY basis from here. 

Oil Service

  • We view the moves in service related names YTD as overdone.
  • Rig count losses are likely to mellow out in the near term (especially on the oil side) and we expect a less precipitous move in 2H vs 1H23 for both oil and natural gas directed drilling. A mild summer would prompt us to be wrong on the natural gas count thought.

  • We see the retreat in frac spreads as largely done as well. 

Questions under The Wrap will be addressed in the Subscriber Mailbag section of the Monday Post. 

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

Enjoy the weekend. 


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