Wrap – Week Ended 01/19/24


Soft start to the year for the upstream, oil service, and renewables groups. In fact pretty much everything in energy aside from uranium started 2024 on the back foot. However, note the arrows on the right side of the table below. We see upstream and service as diverged from their commodities at the moment. While oil and natural gas have shown excessive volatility and an increased short term to ignore supply disruptions and geopolitical risk this year we note the commodities are not down and that volatility in the prompt contracts hasn't been reflected further out in the calendar.

Furthermore, weakness in upstream and oil service have come on light volumes in the low-news-flow-land that is the pre 4Q reporting season. We expect cautious stances on activity levels in NAM and a further sharpened focus on free cash flow and return of capital to be the mantra in January and February in the upstream. In oil service we expect a redoubled focus on partnering with steady, strong balance sheet upstream players to yield improved utilization of a group self limited capacity.

For renewables, we see lower interest rates, better IRA and other rules clarity as driving a better year relative to 2023 and we see the recent air pocket as largely technical on the heels of a year end pop in solar and wind.

Holdings Watch:

  • Last Week We:
    • Added AR back to the portfolio via a Starter Core at $22.38.
    • Added a Trading Only position back in OII.
  • The blotter is updated.

Last Week's Posts:

Have a good weekend,



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