Wrap – Week Ended 07/28/23


The ZLT ended up 3.3% on the week last week.  WTI recapturing the $80 mark (mid point of our near term expected range) with Cal 2023 and 2024 moving in the upper $70's supporting our liquids rich upstream and oil service holdings. Positive color from gassy upstream and oil services names further boosted the portfolio. 

Holdings Watch:  

  • Little activity as we are very long and well positioned for the second half. Generally you will see us add to things we like on big red days in the group but we don't see the need to chase. 
  • We did double our Trading Position in OII at $18 on a knee jerk reaction to earnings. 
  • The blotter is updated. 

Quarterly reports have been largely well received (better than expected outlooks in Service) with the exception of OII and one our renewables wedge names:

  • We are through 25 reports from over 70 names of interest (26 of which we own).
  • This week is Week 3 of the 2Q23 calendar and will see us monitor another 26 reports with more oily upstream names in the mix, 8 of which are in the portfolio. 
  • We'll also check in with management on one oil service name that reported last week. 
  • The calendar tab at left is updated


A few numbers of note from The Wrap table below:


  • WTI > $80 and Brent at ~ $85 are positive for upstream and service sentiment. 
  • Crack spreads are supportive of elevated 3Q23 refiner throughput. 
  • Crack spears are supported by low distillate inventories despite low implied YTD distillate demand. 
  • The gasoline supplied figure is running 2% above 2022 same period levels. On their call last week, Valero indicated again they see EIA as under reporting gasoline demand. 
  • CFTC data shows a smart rebound in the speculative net long position moving back into a more comfortable position after several weeks of bearish looking sentiment levels. 
  • Oily upstream positions make up over 30% of our portfolio and our second largest oily holding is unhedged. 

Natural Gas:

  • Production continues to plateau.
  • LNG continues to plod in the 12 to 13 Bcfgpd range.
  • Mexico exports and Canadian imports are trending uneventfully. 
  • Last week's injection of +16 Bcf was in line with our "around +20 Bcf" target. 
  • This week we expect another "around +20 Bcf" type figure however, given late week heat we see downside bias. Consensus as of Friday was +24 and this likely slips as we get closer to Thursday.  
  • We have adjusted production slightly upward for August and LNG a bit more downward after seeing the last several weeks of data. Part of the issues is Sabine has been slower to come back. This has pushed our EOS from a spring estimate of 3.8 Tcf to our current 3.9 Tcf view. This is fine in our view, going into winter, as long as we have a winter. Cal 2024 is notably $3.50 now. 
  • As a reminder, gassy upstream positions are about 30% of the portfolio and our largest gassy upstream holding is unhedged.    

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

If you want to learn more about our website please feel free to ping us zman@zmansenergybrain.com 

Have a good weekend, 




7 Responses to “Wrap – Week Ended 07/28/23”

  1. 1
    crysball Says:

    What began as discovering 9 illegal taps on a PEMEX pipeline…….turned out to be DOZENS, and this is just one small neighborhood in Maztalan. they even include a map highlighting ( in red) the illegal tap locations.

    How can you run a business with this being tolerated by the government?


  2. 2
    zman Says:

    re 1 – thanks Crysball

  3. 3
    Zorgnak Says:

    Large Specs
    Chasing WTI higher.
    Managed Money dumping shorts.

    Nat Gas
    Large Specs added back a bit on the short side.

  4. 4
    Zorgnak Says:

    Weekly Testing major resistance/supply at the previous longer-term value area lows. Break and hold above the 82 level targets previous major long-term acceptance at 89. Demand volume trends are still positive.

    Daily Will put in a Demark overbought setup with a higher close on Monday. 8-month trading range highs/resistance near 82.

  5. 5
    Zorgnak Says:

    Nat Gas
    Daily Narrow value range going into August. 2.59-2.74. Noisy upside bias with demand volume trend slightly positive both on the daily and weekly time frames.

  6. 6
    Zorgnak Says:

    Broke above key resistance/major long-term acceptance at 135 on increasing demand volume.
    Daily Looks extended to me now. Demark sell setup completes tomorrow with a high above 141.10. Some back and forth above last week’s value range lows at 137.92 would be constructive IMO. Major support at 135.
    65 Minute

  7. 7
    zman Says:

    re 3 – yeah, it gotten quite short.

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