25 March 2020
- Our overall view on supply conditions is mixed with a marginal bullish bias. We observed mixed supply growth across both basins with the pacific basin in particular continuing to show temporary supply tightness in the short-term. Our implied EU Days of Consumption (DoC) Index strengthened as coal burn rates picked up. Notably, it is the first time we turn long on this indicator since week#4-7. However, global inventory levels continue to increase as China in particular, starting to ramp up domestic output.
- Our overall demand view is bullish. We continue to pickup some stabilization in EU fossil fuel power generation utilization rates in the short-term. This should help to further tighten our implied EU DoC indicator in the short-term. Pacific demand improved with the JKT (Japan-Korea-Taiwan) region in particular seeing incremental demand growth.
- While we remain overall bearish, we picked up some improvements in the latest macro conditions. Currency conditions remain outright bearish as the weakness in the strength of importing countries continue to build. Lending conditions continue to improve and are levels not seen for over a year. This should continue to provide a floor to prices. Our implied EU energy intensity indicator too strengthened which suggests higher energy demand in the short-medium term.