Is the Stockmarket or The Commodity Market Right?

China macro is going in the right direction with Q3 up 4.9% yoy. Consequently commodity buying has increased and we saw that with the increased trade for iron between Brazil and China very favourable so far for Newcasttlemax vessels. For oil, although floating storage has decreased significantly, VLCC rates have a hard time rebounding as they should at this time of the year. We expect them to be more a story of Q1 2021 when China re loads on oil. We attended last week the Capital Link conference which was Excellent as usual. We had a number of 1/1 which conforted us in our belief that, if the credit market – except for oil drilling- and the commodity markets are doing better, this has yet to be seen in OIL and Gas equity land. It is hard to believe that natural gas is one of the best commodity this year with HENRY HUB close to +20% YTD when we see the performances of LNG stocks such as FLEX,GASLOG or TELLURIAN. GASLOG credit on the other end has recovered fully from COVID 19 and is trading at par. This is the same story for LPG tankers where rates have recovered but where equities are in the doldrums. Shale gas will take a good two years to see its production go back to 2019 levels where 200 + rigs were in activity vs 70 today. The same applies even more to shale oil. With the commodities expecting to soar on short supply, we can expect good stock moves… It was also interesting to see Biden impact on energy if elected. Tankers think it is neutral to negative as Iran potential come back would mostly favour Iranian tankers whilst reducing the ex Iran oil trade. On the other end, the termination of the US/CHINA trade war will be favourable as 0 barrels and few  ton of gas are so far shipped from the USA to China. We are of the opinion of the worst is behind in the energy equity market.