Oil Market Report

Middle distillates uncomfortably tight

6 JULY 2012

SEB Oil Market Report

Crude oil market

We expect Iran to become increasingly belligerent with sanctions now fully operational, causing extensive damage to its struggling economy. Stronger seasonal demand, however uncertain due to deteriorating global macroeconomic conditions, will also support Brent crude prices during H2-12. We believe Saudi Arabia will take whatever steps are necessary to prevent the oil price from moving substantially below $90/b for an extended period. Overall, we expect Brent crude to average $110/b in Q3-12 and $115/b in Q4-12. General macroeconomic developments continue to deteriorate with flagging manufacturing PMIs posted worldwide throughout June and July partly offsetting seasonally strong global oil demand in H2-12. Currently, the extent to which it will continue to do so is uncertain making it even harder for Saudi Arabia to balance production and demand. So far, it has avoided sending any supportive, verbal signals even when the oil price traded below $90/b in the second half of June. Early July however, it did in fact raise its differential formula prices for all crude benchmarks to Asia, a move likely to strengthen Asian demand for European and the Atlantic basin crude oil. Certainly, Brent crude prices stabilized and moved back above $100/b in response to Saudi Arabia providing such support and also due to positive EU summit results in late June which helped dampen Euro-zone stress. Since the beginning of July, the impact of the Iranian oil embargo has been maximised, reducing its oil exports from around 2 mb/d in late H1-12 to below 1.5 mb/d in H2-12, a move clearly bullish for the Brent crude oil price. Firstly, it will decrease surplus OPEC capacity. Secondly, the risk premium will increase. Iran is already in a dire economic situation with a deteriorating industrial base, rapidly rising inflation generally, and spiralling food prices. Even as the embargo began government finances were poor. Consequently, we believe it will be forced to adopt a policy of brinkmanship to secure a higher price capable of offsetting the effects of lower oil production. Examples to date include verbal aggression and the test firing of several medium- to long-range missiles. The continuation and potential escalation of this situation should provide valuable support for the Brent crude price. Of course, the real risk premium for Brent crude involves full scale military conflict between Israel and Iran, a tail-risk likely to make major short positions fairly unattractive. We still only expect Brent crude to trade below $90/b for brief periods given Saudi Arabias willingness to provide support either by increasing its formula prices or reducing production to circumvent OPEC discussions regarding the 30 mb/d oil production target. Significantly, the likely effectiveness of the oil embargo remains unclear. Currently, an increasing number of Iranian VLCC crude tankers are reportedly heading for China after the US awarded it a 180 day sanction exemption on June 28.

Crude oil price

(NYMEX/ICE, $/b, front month, daily closing)
10 3 15 2 10 2 15 1 10 1 15 0 10 0 9 5 9 0 8 5 8 0 7 5 7 0 ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1
20 09 21 00 21 01 21 02 o 9 kt-0 o 0 kt-1 o 1 kt-1 a r-0 p 9 a r-1 p 0 a r-1 p 1

N EXW I YM T IC Bre t E n

6 5

global IEA global crude oil demand estimates

(mb/d)
9 2 9 1 9 0 8 9 8 8 8 7 8 6 8 5 8 4 8 3 8 2 8 1 8 0 7 9 a r-1 p 2 ju 9 l-0 ju 0 l-1 ja -0 n 9 ja -1 n 0 ja -1 n 1 ju 1 l-1 ja -1 n 2

Chart Sources: IEA, Bloomberg, SEB Commodity Research

Monthly global crude oil demand estimates

2011 (mb/d) 89.1 87.98 87.79 Revision (kb/d) -90 +60 +20 2012 (mb/d) 89.9 88.78 88.69 Revision (kb/d) -60 +100 +20

IEA EIA OPEC

SEB average Brent crude oil price forecast

($/b) 2012 2013 Q1 (118) 110 Q2 (109) 110 Q3 110 115 Q4 115 115 Full Year 113,0 112,5

15 1 13 1 11 1 19 0

17 0 15 0 13 0 11 0 9 9 9 7 9 5

10 0

10 1

10 2

10 3

10 4

10 5

9 3 9 1 8 9 8 7 ag 2 u -1 n v-1 o 2 fe -1 b 3 m j-1 a 3

1 0 20 03 20 04 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02

2 0

3 0

4 0

5 0

6 0

7 0

8 0

9 0

100 000

100 500

200 000

200 500

300 000

300 500

400 000

400 500

(ICE, $/b)

500 00

Crude oil

Crude oil price

20 08

SEB Oil Market Report

IC Bre t E n

Brent futures curve

20 09 Ln og
n v-1 o 3 fe -1 b 4 m j-1 a 4 ag 4 u -1 n v-1 o 4 fe -1 b 5 m j-1 a 5 ag 5 u -1 n v-1 o 5 fe -1 b 6 m j-1 a 6 ag 6 u -1 1 -0 -0 2 7 5 1 -0 -0 2 6 5 1 -0 -0 2 5 4

N EXW I YM T

ag 3 u -1

Speculative positions WTI

Nt e

Sh rt o

Chart Sources: Bloomberg, SEB Commodity Research

(NYMEX, lots, futures and options, weekly data)

(NYMEX/ICE, $/b, front month, weekly closing)

21 00

21 01

21 02

11 0 10 0 9 9 9 8 9 7 9 6 9 5 9 4 9 3 9 2 9 1 9 0 8 9 8 8 8 7 8 6 8 5 8 4 8 3

(NYMEX, $/b)

WTI futures curve

Benchmark spreads
ag 2 u -1 n v-1 o 2 fe -1 b 3 m j-1 a 3 ag 3 u -1 n v-1 o 3 fe -1 b 4 m j-1 a 4 ag 4 u -1 n v-1 o 4 fe -1 b 5 m j-1 a 5 ag 5 u -1 n v-1 o 5 fe -1 b 6 m j-1 a 6 ag 6 u -1 1 -0 -0 2 7 5 1 -0 -0 2 6 5 1 -0 -0 2 5 4

12 month time spread

(daily closing)

(NYMEX/ICE, %, daily closing, >0: contango, <0: backwardation)

8 6 4 2 0 -2 -4 -6 -8 -1 0 -1 2 -1 4 -1 6 -1 8 -2 0 -2 2 -2 4 -2 6 -2 8

1 8 1 6 1 4 1 2

-4 -6 -8 -1 0

1 0 8 6 4 2 0 -2

W Im u B n T in s re t Bre t m u D b i n in s u a Bre t m u U ls n in s ra

IC Bre t E n

N M WI Y EX T

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

SEB Oil Market Report

Crude oil
US crude oil inventories
(DOE, mb, weekly data)
39 0 38 0 37 0 36 0 35 0
c

OECD total industry oil stocks

(mb, monthly data)
2800 2775 2750 2725 2700 2675 2650 2625 5 year range, top 5 year range, bottom 2012 5 year av erage

34 0 33 0 32 0 31 0 j f m a m j j a s o n d 5 ye av ar erage 2 011 2 012

2600 2575 2550 2525 j f m a m j j a s o n d

OECD Europe industry oil stocks

(mb, monthly data)
1020 1010 1000 990 980 970 960 950 940 930 920 910 900 j f m a m j j a s o n d 5 year range, top 5 year range, bottom 2012 5 year av erage

OECD North America industry oil stocks

(mb, monthly data)
1400 1375 1350 1325 1300 1275 1250 1225 1200 1175 j f m a m j j a s o n d 5 year range, top 5 year range, bottom 2012 5 year av erage

OECD Asia & Oceania industry oil stocks

(mb, monthly data)
450 445 440 435 430 425 420 415 410 405 400 395 390 385 380 375 j f m a m j j a s o n d 5 year range, top 5 year range, bottom 2012 5 year av erage

OPEC production
(kb/d, monthly data)
300 30 300 20 300 10 300 00 200 90 200 80 200 70 200 60 200 50 ja -0 n 8 m r-0 a 8 m j-0 a 8 ju 8 l-0 se -0 p 8 n v-0 o 8 ja -0 n 9 m r-0 a 9 m j-0 a 9 ju 9 l-0 se -0 p 9 n v-0 o 9 ja -1 n 0 m r-1 a 0 m j-1 a 0 ju 0 l-1 se -1 p 0 n v-1 o 0 ja -1 n 1 m r-1 a 1 m j-1 a 1 ju 1 l-1 se -1 p 1 n v-1 o 1 ja -1 n 2 m r-1 a 2 m j-1 a 2 200 40 O PEC 2 p d ctio -1 ro u n O PEC 1 p d ctio -1 ro u n

Chart Sources: Bloomberg, IEA, SEB Commodity Research

SEB Oil Market Report

European oil product markets

Although OECD crude oil inventories are increasing rapidly due to plentiful supply, product inventories remain of concern. With few exceptions inventories are low on both sides of the Atlantic. In Europe, economic uncertainty and bad storage economics due to futures curve backwardation are discouraging stock building. Further, refinery closures have reduced product output capacity. If the trend in middle distillates does not reverse soon the market could become even tighter going forward as pre-winter restocking intensifies. However, high refinery utilization in the US should at least begin to replenish low local inventories going forward. The tight product markets still ensure positive European refinery economics. Middle distillate cracks are high while stable, light end cracks have improved. Also, heavy end crack weakness appears to have been short-lived. Light ends: While naphtha demand remains muted cracks have rebounded from very low levels due to higher gasoline blending demand and increased petrochemical demand, in Asia in particular. However, high stocks and structural oversupply of light inputs limit upside potential for naphtha. Also, Atlantic basin gasoline inventories are abnormally low. As a result, the gasoline crack remains resilient, continuing in the same range as middle distillates. Middle distillates: Middle distillate inventories are low both in the US and Europe, a situation compounded by surprisingly strong demand in both regions. In Europe, German restocking has been triggered by the fall in prices. If refinery output and/or imports do not increase the situation could become even tighter. While we see no reason to expect middle distillate cracks to weaken in the short-term, heavy rain in Chile is boosting hydro power output once again following a long drought, something that may divert much needed US middle distillate cargoes to Europe instead. Upgraded Russian refineries have also started supplying more European standard diesel. Gasoil and jet fuel markets are also tight with the former supported by desulphurization demand and MENA refinery maintenance, and the latter by solid summer demand bolstered by improving Asian demand. Heavy ends: Worries concerning the possibility of a tight Asian market in July have eased due to weakening demand, particularly in China. However, lower absolute prices as a result of falling crude prices have triggered supportive buying by both shipping companies and utilities. While restarting Japanese reactors may well dampen prices going forward, the long-term future of the countrys nuclear power program remains in doubt. The European market continues in equilibrium due to plentiful Russian supply while inventories remain normal.

light benchmarks European light end benchmarks

($/t, daily closing)
10 20 15 10 10 10 15 00 10 00 90 5 90 0 80 5 80 0 70 5 70 0 60 5 ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1 Je fu l t e D se 1 p m ie l 0 p G so 0 % a il .1 ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1
H h su h r fu l o (3 % ig lp u e il .5 ) L w su h r fu l o (1 % o lp u e il .0 )

N p th ah a G so e a lin

60 0

middle European middle distillate benchmarks

($/t, daily closing)
15 10 10 10 15 00 10 00 90 5 90 0 80 5 80 0 70 5 70 0 60 5 60 0 50 5

European fuel oil benchmarks

($/t, daily closing)
80 0 75 7 70 5 75 2 70 0 65 7 60 5 65 2 60 0 55 7 50 5 55 2 50 0 45 7 40 5 45 2 40 0 35 7 30 5

Chart Sources: Bloomberg, SEB Commodity Research

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

SEB Oil Market Report

Oil products
gasoline US gasoline and distillate inventories
(DOE, mb, weekly data)
20 4 20 3 20 2 20 1 20 0 10 9 10 8 10 7 10 6 10 5 10 4 10 3 10 2 10 1 j f m a m j j a s o n d G so e 5 ye r a e g a lin a v ra e G so e 2 1 a lin 0 2 D istilla fu l o 5 ye r a e g te e il a v ra e D istilla fu l o 2 1 te e il 0 2

US product benchmarks
(NYMEX, /gal, front month, daily closing)
30 6 30 5 30 4 30 3 30 2 30 1 30 0 20 9 20 8 20 7 20 6 20 5 20 4 20 3 20 2 20 1 20 0 10 9 10 8 G so e a lin H a go e tin il

US refinery utilization
(%, weekly data)
9 3 9 2 9 1 9 0 8 9 8 8 8 7 8 6 8 5 8 4 8 3 8 2 8 1 j f m a m j j a s o n d 2 0 -2 1 a g 0 7 0 1 v. 21 02

ICE Gasoil and European premiums to Gasoil

($/t, daily closing)
10 10 15 00 10 00 90 5 90 0 80 5 80 0 70 5 70 0 60 5 60 0 50 5 IC G so 0 % (le E a il .1 ft) J t fu l p m m (rig t) e e re iu h D se 1 p m p m m (rig t) ie l 0 p re iu h
ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

European product cracks

($/b, daily closing)
3 5 3 0 2 5 2 0 1 5 1 0 5 0 -5 -1 0 -1 5 -2 0 ja -1 n 0 fe b-10 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe b-11 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe b-12 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1 -2 5 N p th ah a J t fue e l Lo su u fu l oil w lph r e D se 1 p m ie l 0 p G so a line G so 0 % a il .1 H h sulp u fue o ig h r l il

low high European low - h igh sulphur fuel oil differential

($/t, daily closing)
7 5 7 0 6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 -5 -1 0 -1 5

Chart Sources: Bloomberg, SEB Commodity Research

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

10 1 10 0 9 0 8 0 7 0 6 0 5 0 4 0 3 0 2 0 1 0 0 -1 0 -2 0

SEB Oil Market Report

Oil products
3Regional 3-2-1 cracks
($/b, daily closing)
3 8 3 6 3 4 3 2 3 0 2 8 2 6 2 4 2 2 2 0 1 8 1 6 1 4 1 2 1 0 8 6 4 2 0 -2 -4 -6 Asia (M a in s) U (W I) S T Eu p (Bre t) ro e n Pe n G lf (D b i) rsia u ua

European naphtha stocks

(kt, monthly data)
10 6 10 5 10 4 10 3 10 2 10 1 10 0 9 0 8 0 7 0 6 0 5 0 4 0 3 0 2 0 j f m a m j j a s o n d 4 ye r ra g , to a ne p 4 ye r ra g , b tto a ne o m 21 02 4 ye r a e g a v ra e

European gasoline stocks

(kt, monthly data)
15 10 10 10 15 00 10 00 90 5 90 0 80 5 80 0 70 5 70 0 60 5 60 0 50 5 50 0 40 5 40 0 j f m a m j j a s o n d 4 ye r ra g , to a ne p 4 ye r ra g , b tto a ne o m 21 02 4 ye r a e g a v ra e

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

European jet fuel stocks

(kt, monthly data)
90 0 80 5 80 0 70 5 70 0 60 5 60 0 50 5 50 0 40 5 40 0 30 5 30 0 20 5 20 0 10 5 10 0 j f m a m j j a

4 ye r ra g , to a ne p 4 ye r ra g , b tto a ne o m 21 02 4 ye r a e g a v ra e s o n d

European gasoil stocks

(kt, monthly data)
30 10 30 00 20 90 20 80 20 70 20 60 20 50 20 40 20 30 20 20 20 10 20 00 10 90 10 80 10 70 10 60 10 50 10 40 10 30 10 20 10 10 10 00 j f

European fuel oil stocks

(kt, monthly data)
15 00 10 00 90 5 90 0 80 5 80 0 70 5 70 0 60 5 60 0 50 5 50 0 40 5 40 0 4 ye r ra g , to a ne p 4 ye r ra g , b tto a ne o m 21 02 4 ye r a e g a v ra e

4 ye r ra g , to a ne p 4 ye r ra g , b tto a ne o m 21 02 4 ye r a e g a v ra e

Chart Sources: Bloomberg, PJK International, SEB Commodity Research

SEB Oil Market Report

Oil products
US implied crude oil demand
(DOE, mb/d, weekly data)
1 ,5 5 1 ,3 5
9,5

US implied gasoline demand

(DOE, mb/d, weekly data)
9,7

1 ,0 5 1 ,8 4 1 ,5 4 1 ,3 4 1 ,0 4 1 ,8 3 1 ,5 3 j f m a m j j a s o n d 5 ag y v. 21 01 21 02
9,3

9,1

8,9

8,7

5y av g. 2011 2012

8,5 j f m a m j j a s o n d

US implied distillate demand

(DOE, mb/d, weekly data)
5,6 5,4 5,2 5y av . g 20 11 20 12

Gasoline arbitrage Rotterdam to New York

($/t, daily closing)
20 15 10 5

5,0 0 4,8 4,6 4,4 4,2 -5 -10 -15 -20

n v-1 o 1

fe -1 b 1

fe -1 b 2

-25

ju -1 n 2

ja -1 n 2

ag 1 u -1

a r-1 p 2

d c-1 e 1

4,0 j f m a m j j a s o n d

Middle distillate arbitrage Rotterdam to New York

($/t, daily closing)
20 15 10 5 0 -5 -10 -15 -20 H eating oil/G asoil J fuel/Kerosene et

n v-1 o 1

fe -1 b 1

fe -1 b 2

-25

m r-1 a 2

a r-1 p 2

m r-1 a 1

Chart Sources: Bloomberg, SEB Commodity Research

m j-1 a 1

se -1 p 1

ag 1 u -1

d c-1 e 1

m j-1 a 2

o 1 kt-1

a r-1 p 1

ja -1 n 1

ju -1 n 1

ja -1 n 2

ju -1 n 2

ju 1 l-1

ju 2 l-1

m r-1 a 1

m r-1 a 2

m j-1 a 1

se -1 p 1

m j-1 a 2

ju -1 n 1

ja -1 n 1

a r-1 p 1

ju 1 l-1

o 1 kt-1

ju 2 l-1

SEB Oil Market Report

Related energy markets

US natural gas price
(NYMEX, $/MMBtu, front month, weekly closing)
80 75 70 65 60 55 50 45 40 35 30 25 20

UK natural gas price

(ICE, front month, weekly closing)
16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 10 40 30 20 50 $/M Btu (left axis) M G Bp/therm (right axis) 90 80 70 60

20 09

21 00

21 01

21 02

20 07

20 08

20 09

21 00

21 01

price Nordic power price

(Nord Pool, /MWh, front quarter, weekly closing)
80 75 70 65 60 55 50 45 40 35 30 25 20

Continental power price

(EEX, /MWh, front quarter, weekly closing)
95 90 85 80 75 70 65 60 55 50 45 40 35 30 25 20

20 07

20 08

20 09

21 00

21 01

21 02

20 07

20 08

20 09

21 00

21 01

EUA price
(ECX ICE, /t, Dec. 11, weekly closing)
34 32 30 28 26 24 22 20 18 16 14 12 10 8 6

21 02

Coal price
(CIF ARA steam coal, API#2, daily closing)
135 130 125 120 115 110 105 100 95 90 85 80 75 70

20 07

20 08

20 09

21 00

21 01

Chart Sources: Bloomberg, SEB Commodity Research

21 02

ja -1 n 0 fe -1 b 0 m r-1 a 0 a r-1 p 0 m j-1 a 0 ju -1 n 0 ju 0 l-1 ag 0 u -1 se -1 p 0 o 0 kt-1 n v-1 o 0 d c-1 e 0 ja -1 n 1 fe -1 b 1 m r-1 a 1 a r-1 p 1 m j-1 a 1 ju -1 n 1 ju 1 l-1 ag 1 u -1 se -1 p 1 o 1 kt-1 n v-1 o 1 d c-1 e 1 ja -1 n 2 fe -1 b 2 m r-1 a 2 a r-1 p 2 m j-1 a 2 ju -1 n 2 ju 2 l-1

21 02

SEB Oil Market Report

Market indicators
MSCI World equity market index
(weekly closing)
1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 600

UBS Bloomberg CMCI commodity market index

(price index, weekly closing)
1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 600

20 05

20 06

20 07

20 08

20 09

21 00

21 01

21 02

20 05

20 06

20 07

20 08

20 09

21 00

21 01

JPM global manufacturing PMI

(monthly, PMIs >50 expansive)
58 56 54 52 50 48 46 44 42 40 38 36 34 32

Regional PMI:s
(monthly data)
6 5 6 0 5 5 5 0 4 5 4 0 3 5 3 0 U S E ro n u zo e C in h a R fe n e re ce

20 05

20 06

20 07

20 08

20 09

21 00

21 01

Regional industrial production growth

(%, y/y, monthly data)
2 5 2 0 1 5 1 0 5 0 -5 -1 0 -1 5 -2 0 -2 5 m r-0 a 6 ju -0 n 6 se -0 p 6 d c-0 e 6 m r-0 a 7 ju -0 n 7 se -0 p 7 d c-0 e 7 m r-0 a 8 ju -0 n 8 se -0 p 8 d c-0 e 8 m r-0 a 9 ju -0 n 9 se -0 p 9 d c-0 e 9 m r-1 a 0 ju -1 n 0 se -1 p 0 d c-1 e 0 m r-1 a 1 ju -1 n 1 se -1 p 1 d c-1 e 1 m r-1 a 2 U S Eu zo e ro n C in h a

21 02

OECD composite leading indicators

(monthly, 100 corresponds to long term trend growth in industrial production)
14 0 13 0 12 0 11 0 10 0 9 9 9 8 9 7 9 6 9 5 9 4 9 3 20 05 20 06 20 07 20 08 20 09 21 00 21 01 21 02 C in h a Eu zo e ro n O D EC U SA R fe n e re ce

Chart Sources: Bloomberg, OECD, SEB Commodity Research

m r-0 a 6 ju -0 n 6 se -0 p 6 d c-0 e 6 m r-0 a 7 ju -0 n 7 se -0 p 7 d c-0 e 7 m r-0 a 8 ju -0 n 8 se -0 p 8 d c-0 e 8 m r-0 a 9 ju -0 n 9 se -0 p 9 d c-0 e 9 m r-1 a 0 ju -1 n 0 se -1 p 0 d c-1 e 0 m r-1 a 1 ju -1 n 1 se -1 p 1 d c-1 e 1 m r-1 a 2 ju -1 n 2

10

21 02

SEB Oil Market Report

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Good faith & limitations

Opinions, projections and estimates contained in this report represent the authors present opinion and are subject to change without notice. Although information contained in this report has been compiled in good faith from sources believed to be reliable, no representation or warranty, expressed or implied, is made with respect to its correctness, completeness or accuracy of the contents, and the information is not to be relied upon as authoritative. To the extent permitted by law, SEB accepts no liability whatsoever for any direct or consequential loss arising from use of this document or its contents.

Disclosures
The analysis and valuations, projections and forecasts contained in this report are based on a number of assumptions and estimates and are subject to contingencies and uncertainties; different assumptions could result in materially different results. The inclusion of any such valuations, projections and forecasts in this report should not be regarded as a representation or warranty by or on behalf of the SEB Group or any person or entity within the SEB Group that such valuations, projections and forecasts or their underlying assumptions and estimates will be met or realized. Past performance is not a reliable indicator of future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. This document does not constitute investment advice and is being provided to you without regard to your investment objectives or circumstances. Anyone considering taking actions based upon the content of this document is urged to base investment decisions upon such investigations as they deem necessary. This document does not constitute an offer or an invitation to make an offer, or solicitation of, any offer to subscribe for any securities or other financial instruments.

Conflicts of Interest
SEB has in place a Conflicts of Interest Policy designed, amongst other things, to promote the independence and objectivity of reports produced by its Research departments, which are separated from the rest of SEB business areas by information barriers; as such, research reports are independent and based solely on publicly available information. Your attention is drawn to the fact that a member of, or an entity associated with, SEB or its affiliates, officers, directors, employees or shareholders of such members (a) may be represented on the board of directors or similar supervisory entity of the companies mentioned herein (b) may, to the extent permitted by law, have a position in the securities of (or options, warrants or rights with respect to, or interest in the securities of the companies mentioned herein or may make a market or act as principal in any transactions in such securities (c) may, acting as principal or as agent, deal in investments in or with companies mentioned herein, and (d) may from time to time provide investment banking, underwriting or other services to, or solicit investment banking, underwriting or other business from the companies mentioned herein.

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The SEB Group: members, memberships and regulators Skandinaviska Enskilda Banken AB (publ) is incorporated in Sweden, as a Limited Liability Company. It is regulated by Finansinspektionen, and by the local financial regulators in each of the jurisdictions in which it has branches or subsidiaries, including in the UK, by the Financial Services Authority; Denmark by Finanstilsynet; Finland by Finanssivalvonta; Germany by Bundesanstalt fr Finanzdienstleistungsaufsicht and Norway by Finanstilsynet. In the US, SEBAB is a U.S. broker-dealer, registered with the Financial Industry Regulatory Authority (FINRA). SEBAB is a direct subsidiary of SEB. SEB is active on major Nordic and other European Regulated Markets and Multilateral Trading Facilities, in as well as other non-European equivalent markets, for trading in financial instruments. For a list of execution venues of which SEB is a member or participant, visit http://www.seb.se.

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SEB Commodity Research

Bjarne Schieldrop, Chief Commodity Analyst bjarne.schieldrop@seb.no +47 9248 9230 Filip Petersson, Commodity Strategist filip.petersson@seb.se +46 8 506 230 47

www.seb.se