We analyse latest US mobility trends and reiterate our 16 June bullish oil call. Our rationale for higher oil prices on the back of the economy reopening, coupled with a strong preference for car journeys during the peak US driving season has been reinforced by recent mobility data. A continued reduction in oil supply given the latest production cuts also supports our bullish view.
Energy prices have started to drop back recently as a spike in COVID cases has delayed reopenings in several US states. But this is within normal ranges and we do not see this significantly effecting our bullish oil and gasoline views. Overall we retain our Dec 2020 $48 WTI Call option recommendation.
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.
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