Re-opening of economies and less use of public transport should see energy demand pick up
OPEC supply cuts and global producers shutting down high cost drilling should see supply fall
We position for oil price increases through deep out-of-the-money calls which takes advantage of recent dynamics in options markets




Background:

Global economy begins to re-open triggering a significant rebound in energy demand from low levels. Despite the recent jump in cases in certain US states, we don’t see that having a significant impact on the economy re-opening.

China has led the rebound in demand, but now others in Asia, like Japan, are following. Europe and US are also now entering their re-opening phases.
Concern around the COVID infection risk around using subway systems, and general public transport will likely see more use of cars as people return to work.

As lockdown measures are loosened, we expect an increase in short term holiday travel specifically led by the US. However, rather than using domestic flights, people will likely use cars instead. This could see an upside surprise in demand coming during the US peak driving season. We could see potential similar experiences during European holiday season.