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Long Coal / Short Oil (Medium Term Outlook)

Long coal / short oil (medium term outlook)

Coal

Demand side:

  • Growing demand in China, India, Japan
  • Coal and US gas are the only cheap fossil fuels. While coal is cheaper and easier to ship than gas

Supply side:

  • At current price levels many small coal producers in China, as well as large producers in Australia and US sustain losses

Key risks: Economic slowdown in China, illegal coal production in Indonesia

Oil

Demand Side:

  • oil use would start contracting in the OECD
  • domestic demand growth in China has slowed

Supply side:

  • supply boom in North America
  • PG and biofuels

Key risks: Situation in Iraq and Libya