10 January 2020
- Overall short-term supply conditions are bullish. Supply growth across both basins continue to abate and this is useful in providing a floor to prices. We note that supply flow in the Atlantic basin has been tightening for the past 4 weeks which has been the longest since middle last year. Our Implied EU Days of Consumption (DoC) Index continues to weaken with the coal burn rates continue to be a drag. Global inventory levels continue to tighten and we expect that to persist till week#4.
- Our overall demand view is bullish. We finally picked up some uptick in EU fossil fuel power generation utilization rates in the short-term. If it materializes, EU DoC is expected to tighten further. Pacific demand also continues to pickup as China’s days of Consumption (DoC) continues to tighten while demand from North-East Asia continues to improve.
- Our assessment of the latest macro conditions turned bullish. Our currency model is showing further weakness for prices as the earlier uplift generated by the weakening USD abates. The latest manufacturing data was largely encouraging and our macro index gained further strength. Lending conditions finally continue to improve after been contracting