Predicting Oil Prices. Thina Margrethe Saltvedt, Senior Analyst Macro/Oil

Transcription

1 Predicting Oil Prices Thina Margrethe Saltvedt, Senior Analyst Macro/Oil November

2 Oil price drivers Financial markets Commercial/Non-commercials USD Asset prices Liquidity injections Risk Appetite Short/Medium term Inventory levels OPEC goals and disipline Weather Refinery capacity Income development Geopolitical risk Long-term Supply/Demand OPEC target price and spare capacity Non-OPEC peak production Emerging Markets demand growth Renewable energy and regulatory changes Oil intensity Technological changes Source: PIRA, Nordea Markets 2 1 December, 2012

3 Nordea: Brent oil price forecast in USD per barrel 04/09/2012 Q1 Q2 Q3 Q4 Year E E E

4 USD/bbl Forward curve: Large fluctuations in short term contracts «Speculators» have cut their long oil bets to a two year s low March Managed Money net positions vs. WTI price 350, ,000 Now Nov , , , ,000 Late June Nov07 20Nov09 20Nov11 WTI Net positions, rhs 50,000 0 Sources: Bloomberg, Ecowin Reuters, CFTC 4

5 High oil prices and a weaker EUR vs USD Liquidity injections can influence oil prices through higher expected growth or inflation 150 USD/barrel EUR/USD Poltical risk and Euro crisis Inflation worries Risk appetite on/off Crude Oil Brent, blue EUR/USD, dark blue

6 mb/d USD/bbl Oil exporters budget breakeven oil prices to increasingly affect oil price formation Oil market searches for price required for next trillion barrels USD/barrel Implied OPEC effective spare capacity and Brent price forecast World runs out of spare capacity Q2002 2Q2004 4Q2005 2Q2007 4Q2008 2Q2010 4Q Effective spare Effective spare (f'cast) Brent 1.pos, rhs Brent (f'cast), rhs 6 Source: PIRA, IEA, Nordea Markets

7 Thousand barrels per day 10 largest oil exporter in the world today may have a net export deficit in 2017 who will cover the gap? Azerbaijan Kazakhstan Canada Qatar Algeria Venezuela Norway Angola Iraq Nigeria Kuwait UAE Iran Russia Saudi Arabia Changes in export volumes in 2017 from largest oil exporters in the world - only 2 politically stable Million barrels per day 7 Source: IEA, EIA and Nordea Markets

8 Worldwide upstream oil and gas investment and upstream investment cost index Source: IEA 8

9 Do we see a supply response after all?

10 Shale oil revolution counterbalance supply disturbances outside OPEC 17.5 USD per mmbtu USD per barrel Natural Gas Henry Hub, lhs Natural gas Oil WTI light sweet crude, rhs Source: Reuters EcoWin 10 Source: PIRA and Reuters Ecowin

11 Global unconventional oil: average production cost curve More expensive oils replace natural decline of conventional oils Source: IEA 11

12 World oil supply still fields yet-to-be found to cover expected future oil demand growth Source: IEA 12

13 World offshore crude oil production Deepwater production moving up on the agenda Gulf of Mexico, Brazil and West Africa From 4.8m b/d in 2011 to 8.7m b/d in 2035 Gulf oil exploration seeing steady recovery. Before: 30% of US oil production. Now: 20%, next ten years rise to 28% Source: IEA, Subsea7 13

14 World oil demand by sector : Transportation sector accounts for 52% of total oi demand expected to rise to 60% by 2035 Source: IEA 14

15 Contact details: Thina Margrethe Saltvedt Senior Macro/Oil Analyst Commodities Research Nordea Markets Phone: Mobile:

16 Nordea Markets is the name of the Markets departments of Nordea Bank Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea Bank Danmark A/S. The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient. The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.