SEB report: Oil price set to continue rising

8/2/2019 SEB report: Oil price set to continue rising

1/12

Oil Market ReportLast chance for a diplomatic solution?

8 MARCH 2012


2/12


3/12

3

SEB Oil Market Report

Crude oilCrude oil priceCrude oil priceCrude oil priceCrude oil price(NYMEX/ICE, $/b, front month, weekly closing)

12 month12 month12 month12 month time spreadtime spreadtime spreadtime spread(NYMEX/ICE, %, daily closing, >0: contango,


4/12

4


Crude oilUS crude oil inventoriesUS crude oil inventoriesUS crude oil inventoriesUS crude oil inventories(DOE, mb, weekly data)

OOOOECDECDECDECD totaltotaltotaltotal industry oil stocksindustry oil stocksindustry oil stocksindustry oil stocks(mb, monthly data)

310

320

330

340

350

360

370

380

j f m a m j j a s o n d

5 year average

2011

2012

c

2500

2525

2550

2575

2600

2625

2650

2675

2700

2725

2750

2775

2800


5 year range, top

5 year range, bottom

2011

5 year average

OECD Europe industry oil stocksOECD Europe industry oil stocksOECD Europe industry oil stocksOECD Europe industry oil stocks(mb, monthly data)

OECD North America industry oil stocksOECD North America industry oil stocksOECD North America industry oil stocksOECD North America industry oil stocks(mb, monthly data)

890

900

910

920

930940

950

960

970

980

990

1000

1010

1020


5 year range, top


2011

5 year average

1175

1200

1225

1250

1275

1300

1325

1350

1375

1400


5 year range, top


2011

5 year average

OECD Asia & Oceania industry oil stocksOECD Asia & Oceania industry oil stocksOECD Asia & Oceania industry oil stocksOECD Asia & Oceania industry oil stocks(mb, monthly data)

OPEC productionOPEC productionOPEC productionOPEC production(kb/d, monthly data)

375

380

385390395400

405

410415

420425430

435440

445450455

460

465


5 year range, top


2011

5 year average

24000

26000

28000

30000

32000

34000

jan-0

8

mar-

08

ma

j-08

jul-08

sep-0

8

nov-0

8

jan-0

9

mar-

09

ma

j-09

jul-09

sep-0

9

nov-0

9

jan-1

0

mar-

10

ma

j-10

jul-10

sep-1

0

nov-1

0

jan-1

1

mar-

11

ma

j-11

jul-11

sep-1

1

nov-1

1

jan-1

2

OPEC-12 production

OPEC-11 production

Chart Sources: Bloomberg, IEA, SEB Commodity Research


5/12

5


European oil product markets

The higher the crude oil price, the more it depresses end

consumer demand. Of course, in local currency terms theprice of oil and oil products relative to 2008 highs varies,

with Europe particularly badly affected. Consumers areaiming to avoid buying as long as possible while hoping

prices will decrease once again. For this and other reasonsincluding negative economic growth, soft heating demandand normal seasonal weakness affecting several products,

Europe possesses a relatively bearish total demand outlook.One of only a few supportive factors for the market balance

is the string of refinery shutdowns that may become abullish issue should demand recover again, e.g. ifconsumers are forced to restock or secure supplies as the

Iranian embargo impacts fully. Following positivedevelopments in refinery economics since December last

year, the February crude oil rally had a negative impact

although the situation is well short of the position late lastyear. Meanwhile the structural shift in refining capacity

eastwards continues as the OECD share of global oilconsumption continues to decrease both in absolute and

relative terms.

Light ends: The light end of the barrel has continued torally to currently trade near early 2011 highs while crackshave moved sideways over the last month. The relatively

tight Asian naphtha market requires inflows from otherregions during spring refinery maintenance, with a

correspondingly supportive impact on the European market.Tight market conditions are also reflected in strong Asian

demand for light crude oil qualities. The gasoline market isweaker as volumes of winter specification remain unsold atthe same time as the market is beginning to demand its

summer counterpart. While the naphtha market appearsrelatively well supported over the next month, a gasolineimprovement is unlikely to occur until the driving season

gets under way.

Middle distillates: Currently, the middle of the barrel isweakest. Prices have been rising alongside crude but not byenough to prevent the cracks from falling back. Jet fuel

demand is seasonally low and as temperatures are fairlyhigh heating demand is generally depressed. We see no

signs of the much-feared diesel shortage, with demandweak and inventories more than satisfactory. At present, itis difficult to envisage any specific potential catalysts in

middle distillates.

Heavy ends: While the low sulphur fuel oil crack has heldup well, its high sulphur counterpart has continued to fall

back. Asian demand for HSFO remains healthy although it isnow significantly weaker than earlier this year.Consequently, the LS-HS spread has blown apart after

achieving near parity. However, at least for now, thereappear to be insufficient tankers to transport cargoes from

Europe to Asia, which may restrict the European HSFOmarket temporarily.

European lEuropean lEuropean lEuropean lightightightight endendendend benchmarksbenchmarksbenchmarksbenchmarks($/t, daily closing)

600

650

700

750

800

850

900

950

1000

1050

1100

1150

1200

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Naphtha

Gasoline

European mEuropean mEuropean mEuropean middleiddleiddleiddle distillatedistillatedistillatedistillate benchmarksbenchmarksbenchmarksbenchmarks($/t, daily closing)

550

600

650

700

750

800

850

900

950

1000

1050

1100

1150

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Jet fuel

Diesel 10 ppm

Gasoil 0.1%

EuropeanEuropeanEuropeanEuropean fuel oilfuel oilfuel oilfuel oil benchmarksbenchmarksbenchmarksbenchmarks($/t, daily closing)

350

375

400

425

450

475

500

525

550

575

600

625

650675

700

725

750

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

High sulphur fuel oil (3.5%)

Low sulphur fuel oil (1.0%)

Chart Sources: Bloomberg, SEB Commodity Research


6/12

6


Oil productsUS gUS gUS gUS gasoline and distillate inventoriesasoline and distillate inventoriesasoline and distillate inventoriesasoline and distillate inventories(DOE, mb, weekly data)

US product benchmarksUS product benchmarksUS product benchmarksUS product benchmarks(NYMEX, /gal, front month, daily closing)

120

130

140

150

160

170

180

190

200

210

220

230

240


Gasoline 5 year average

Gasoline 2012

Distillate fuel oil 5 year average

Distillate fuel oil 2012

180190200210220230240250260270280290300310320330

340350360

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Gasoline

Heating oil

US refinery utilizationUS refinery utilizationUS refinery utilizationUS refinery utilization(%, weekly data)

ICE Gasoil anICE Gasoil anICE Gasoil anICE Gasoil andddd European premiumsEuropean premiumsEuropean premiumsEuropean premiums to Gasoilto Gasoilto Gasoilto Gasoil($/t, daily closing)

81

82

83

84

85

86

87

88

89

90

91


2007-2011 avg.

2012

550

600

650

700

750

800

850

900

950

1000

1050

1100

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

-20

-10

0

10

20

30

40

50

60

70

80

90

100

110

ICE Gasoil 0.1% (left)Jet fuel premium (right)Diesel 10 ppmpremium (right)

EuropeanEuropeanEuropeanEuropean productproductproductproduct crackscrackscrackscracks($/b, daily closing)

European lEuropean lEuropean lEuropean lowowowow ---- hhhhighighighigh sulphursulphursulphursulphur fuel oilfuel oilfuel oilfuel oil differentialdifferentialdifferentialdifferential($/t, daily closing)

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Naphtha GasolineJet fuel Gasoil 0.1%Lowsulphur fuel oil High sulphur fuel oilDiesel 10 ppm

-15-10-505

101520253035404550

5560657075

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Chart Sources: Bloomberg, SEB C ommodity Research


7/12

7


Oil productsRegional 3Regional 3Regional 3Regional 3----2222----1 cracks1 cracks1 cracks1 cracks($/b, daily closing)

European naphtha stocksEuropean naphtha stocksEuropean naphtha stocksEuropean naphtha stocks(kt, monthly data)

-6-4-202468

1012141618202224262830

32343638

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Asia (Minas)US (WTI)Europe (Brent)

Persian Gulf (Dubai)

20

30

40

50

60

70

80

90

100

110

120

130

140

150

160


4 year range, top


2012

4 year average

European gasoline stocksEuropean gasoline stocksEuropean gasoline stocksEuropean gasoline stocks(kt, monthly data)

European jet fuel stocksEuropean jet fuel stocksEuropean jet fuel stocksEuropean jet fuel stocks(kt, monthly data)

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050

1100

1150


4 year range, top


2012

4 year average

100

150

200

250

300350

400

450

500

550

600

650

700

750

800

850

900


4 year range, top


2012

4 year average

European gasoil stocksEuropean gasoil stocksEuropean gasoil stocksEuropean gasoil stocks(kt, monthly data)

European fuel oil stocksEuropean fuel oil stocksEuropean fuel oil stocksEuropean fuel oil stocks(kt, monthly data)

1000110012001300140015001600170018001900200021002200230024002500260027002800290030003100


4 year range, top


2012

4 year average

400

450

500

550

600

650

700

750

800

850

900

950

1000

1050


4 year range, top


2012

4 year average

Chart Sources: Bloomberg, PJK International, SEB Commodity Research


8/12

8


Oil productsUS implied crude oil demandUS implied crude oil demandUS implied crude oil demandUS implied crude oil demand(DOE, mb/d, weekly data)

US implied gasoline demandUS implied gasoline demandUS implied gasoline demandUS implied gasoline demand(DOE, mb/d, weekly data)

13,5

13,8

14,0

14,3

14,5

14,8

15,0

15,3

15,5


5y avg.

2011

2012

8,5

8,7

8,9

9,1

9,3

9,5

9,7


5y avg.

2011

2012

US implied distillate demandUS implied distillate demandUS implied distillate demandUS implied distillate demand(DOE, mb/d, weekly data)

Gasoline arbitrage Rotterdam to New YorkGasoline arbitrage Rotterdam to New YorkGasoline arbitrage Rotterdam to New YorkGasoline arbitrage Rotterdam to New York($/t, daily closing)

4,0

4,2

4,4

4,6

4,8

5,0

5,2

5,4

5,6


5y avg.

2011

2012

-25

-20

-15

-10

-5

0

5

10

15

20

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Middle distillate arbitrage Rotterdam to New YorkMiddle distillate arbitrage Rotterdam to New YorkMiddle distillate arbitrage Rotterdam to New YorkMiddle distillate arbitrage Rotterdam to New York($/t, daily closing)

-25

-20

-15

-10

-5

0

5

10

15

20

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12

Heating oil/Gasoil

Jet fuel/Kerosene



9/12

9


Related energy marketsUS natural gas priceUS natural gas priceUS natural gas priceUS natural gas price(NYMEX, $/MMBtu, front month, weekly closing)

UKUKUKUK natural gas pricenatural gas pricenatural gas pricenatural gas price(ICE, front month, weekly closing)

2

3

4

5

6

7

8

9

10

11

12

13

14

2007

2008

2009

2010

2011

2012

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

2007

2008

2009

2010

2011

2012

10

20

30

40

50

60

70

80

90$/MMBtu (left axis)

GBp/therm (right axis)

Nordic power priceNordic power priceNordic power priceNordic power price(Nord Pool, /MWh, front quarter, weekly closing)

Continental power priceContinental power priceContinental power priceContinental power price(EEX, /MWh, front quarter, weekly closing)

20

25

30

35

40

45

50

55

60

65

70

75

80

2007

2008

2009

2010

2011

2012

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

2007

2008

2009

2010

2011

2012

EUA priceEUA priceEUA priceEUA price(ECX ICE, /t, Dec. 11, weekly closing)

CoalCoalCoalCoal pricepricepriceprice(CIF ARA steam coal, API#2, daily closing)

6

8

10

12

14

16

18

20

22

24

26

28

30

32

34

2007

2008

2009

2010

2011

2012

65

70

75

80

85

90

95

100

105

110

115

120

125

130

135

jan-1

0

feb

-10

mar-

10

apr-

10

ma

j-10

jun-1

0

jul-10

aug-1

0

sep-1

0

okt-10

nov-1

0

dec-1

0

jan-1

1

feb

-11

mar-

11

apr-

11

ma

j-11

jun-1

1

jul-11

aug-1

1

sep-1

1

okt-11

nov-1

1

dec-1

1

jan-1

2

feb

-12

mar-

12



10/12

10


Market indicatorsMSCI WorldMSCI WorldMSCI WorldMSCI World equity market indexequity market indexequity market indexequity market index(weekly closing)

UBS Bloomberg CMCIUBS Bloomberg CMCIUBS Bloomberg CMCIUBS Bloomberg CMCI commodity market indexcommodity market indexcommodity market indexcommodity market index(price index, weekly closing)

600

700

800

900

1000

1100

1200

1300

1400

1500

1600

1700

2005

2006

2007

2008

2009

2010

2011

2012

600

700

800

900

1000

1100

1200

1300

1400

1500

1600

1700

1800

2005

2006

2007

2008

2009

2010

2011

2012

JPM global manufacturing PMIJPM global manufacturing PMIJPM global manufacturing PMIJPM global manufacturing PMI(monthly, PMIs >50 expansive)

Regional PMI:sRegional PMI:sRegional PMI:sRegional PMI:s(monthly data)

32

34

36

3840

42

44

46

48

50

52

54

56

58

2005

2006

2007

2008

2009

2010

2011

2012

30

35

40

45

50

55

60

65

mar-

06

jun-0

6

sep-0

6

dec-0

6

mar-

07

jun-0

7

sep-0

7

dec-0

7

mar-

08

jun-0

8

sep-0

8

dec-0

8

mar-

09

jun-0

9

sep-0

9

dec-0

9

mar-

10

jun-1

0

sep-1

0

dec-1

0

mar-

11

jun-1

1

sep-1

1

dec-1

1

US

Eurozone

China

Reference

Regional industrial productionRegional industrial productionRegional industrial productionRegional industrial production growthgrowthgrowthgrowth(%, y/y, monthly data)

OECD composite leading indicatorsOECD composite leading indicatorsOECD composite leading indicatorsOECD composite leading indicators(monthly, 100 corresponds to long term trend growth in industrial production)

-25

-20

-15

-10

-5

0

5

10

15

20

25

mar-

06

jun-0

6

sep-0

6

dec-0

6

mar-

07

jun-0

7

sep-0

7

dec-0

7

mar-

08

jun-0

8

sep-0

8

dec-0

8

mar-

09

jun-0

9

sep-0

9

dec-0

9

mar-

10

jun-1

0

sep-1

0

dec-1

0

mar-

11

jun-1

1

sep-1

1

dec-1

1

US

EurozoneChina

8889

9091

92

93

94

9596

9798

99

100101

102103

104105

2005

2006

2007

2008

2009

2010

2011

China

Eurozone

OECD

USA

Reference

Chart Sources: Bloomberg, OECD, SEB Commodity Research


11/12

11


DISCLAIMER & CONFIDENTIALITY NOTICE

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska EnskildaBanken AB (publ) (SEB).

Opinions contained in this report represent the banks present opinion only and are subject to change without notice. All

information contained in this report has been compiled in good faith from sources believed to be reliable. However, norepresentation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents andthe information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of thisdocument is urged to base his or her investment decisions upon such investigations as he or she deems necessary. Thisdocument is being provided as information only, and no specific actions are being solicited as a result of it; to the extentpermitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this documentor its contents.

SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic andother European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets)for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange,Deutsche Brse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden;

it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designatedinvestment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEBconducts operations.

SEB Merchant Banking. All rights reserved.

SEB Commodity Research

Bjarne Schieldrop, Chief Commodity [email protected]

+47 9248 9230

Filip Petersson, Commodity [email protected]

+46 8 506 230 47


12/12

www.seb.se

SEB report: Oil price set to continue rising

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