SG - Oil Driver 8may13

COMMODITIES 06 May 2013
Important Notice: The circumstances in which this publication has been produced are such that it is not appropriate to characterise it as independent investment research as referred to in MiFID and that it should be treated as a marketing communication even if it contains a research recommendation. This publication is also not subject to any prohibition on dealing ahead of the dissemination of investment research. However, SG is required to have policies to manage the conflicts which may arise in the production of its research, including preventing dealing ahead of investment research.
Weekly
Extract from a report
Oil Drivers
Michael Wittner (1) 212 278 64 38
michael.wittner@sgcib.com
June Atlantic Basin sweet crude supply and demand should tighten vs. May. The result of this should be that, as we progress through May and trade June barrels, physical fundamentals should exert upward pressure on the front of the Brent forward curve.
Oil market scoreboard (see full scoreboard on next page)

Bear MARKET FUNDAMENTALS MARKET SIGNALS NEAR-TERM DIRECTION
Source: SG Cross Asset Research
Bull
Demand is holding its own, but the Saudis need to keep an eye on OPEC supply creeping up. Technicals, managed money, and refining margins are all neutral. But geopolitics is bullish. Neutral. But gradually more bullish as May progresses, on seasonally higher crude buying.
Summary
A macro tug of war for oil prices is taking place. The data flow for the US, China, and Europe continues to be mixed to bearish, but the central banks (the Fed and ECB) are demonstrating their intention to keep easing and providing liquidity for the markets. There is more upside than downside for Brent, due to the strong seasonality of global refinery crude runs. There is more downside than upside for WTI. After the Longhorn pipeline start-up, the Whiting refinery restart (which is mainly about sour crude, not sweet crude), and a small increment from the Permian Express pipeline in Q2, there are no more significant pipeline start-ups scheduled until December 2013. In the meantime, the relentless growth in US supply will, once again, exert downward pressure on WTI vs. LLS and Brent.
Atlantic Basin sweet crude (Mb/d) tightening in June vs. May

May Supply (loadings) North Sea Nigeria Angola Total Dem and OECD Americas crude runs OECD Europe crude runs West Africa to Asia flow s North Sea to Asia flow s North Sea to US flow s Total 18.20 11.50 1.87 0.00 0.07 31.64 18.50 11.60 1.87 0.00 0.00 31.97 0.40 -0.10 0.06 0.00 0.00 0.36 -0.07 0.30 0.10 1.93 2.00 1.83 5.76 1.93 1.85 1.66 5.44 June May vs. Apr -0.04 0.26 0.07 0.29 Jun
3 month price history

Last price Minimum Maximum
vs. May ICE Brent 0.00 NymexWTI -0.15 ICE Gasoil -0.17 Nymex Gasoline -0.32 Nymex Heating Oil
102.77 93.93 847.00 277.31 285.24
97.69 86.68 822.75 271.90 273.46
118.90 97.77 1030.75 320.35 323.84
Forecasts vs forward price

Q2 13 vs. fwd Q3 13 vs. fwd Q413 vs. fwd
0.00 ICE Brent 0.00 Nymex WTI -0.07 ICE Gasoil 0.34 -0.66
Nymex Gasoline Nymex Heating oil
109.0 91.5 931 301 307
6% -2% 10% 8% 7%
113.7 98.7 966 294 306
12% 5% 14% 10% 7%
112.3 99.8 964 273 303
11% 7% 14% 2% 6%
supply change - dem and change

Source: Reuters, IEA, trade press, SG Cross Asset Research
Source: SG Cross Asset Research, Date of price forecasts: 20 March 2013
Please see disclaimer and disclosures at the end of this document
This document is being provided for the exclusive use of TOON SUKRIT (UOB KAY HIAN PTE LTD)
Oil Drivers
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Scoreboard
Scoreboard
Oil market scoreboard

Bear
MARKET FUNDAMENTALS Demand Economic outlook Seasonality Weather Supply OPEC production Refinery runs Freight and arbitrages Stocks US DOE expectations US PADD 2 & 3 crude stocks US/Europe/Japan stocks MARKET SIGNALS Market momentum Hedge funds' net position Implied probability Technical analysis Market sentiment Refining margins
Bull
Demand is holding its own, but the Saudis need to keep an eye on OPEC supply creeping up. US Feb final demand - 100 kb/d y-o-y. Jan-Apr est. + 60 kb/d y-o-y, in line with expectations. Opposing forces. Macro data continues mixed to bearish for the US, Europe and China. However, this is being offset by ongoing liquidity/easing: the US Fed shifted to a neutral stance and the ECB cut rates. Demand for crude oil and refined products increases seasonally in May. Not currently a factor for the oil markets. OPEC creeping up. Saudis may need to trim or hold steady; either way, exports would be lower. Reuters: OPEC crude in April at 30.46 Mb/d (+ 280 kb/d m-o-m). Saudi supply flat, with gains due to Iraq, Iran, and Libya. Naimi said Saudis have no plans to hike production capacity and would be lucky to see output over 9 Mb/d by 2020. Global rebound in refinery runs in June (+1.1 Mb/d m-o-m) and July (+0.9 Mb/d m-o-m). Europe to US: crude closed, but gasoline open. US to Europe: heating oil closed. May will be a key month for Cushing and WTI. Cushing is flat this year, but May draws expected. For this week, we forecast - 0.2 Mb for crude; + 1.5 Mb for gasoline; and - 0.6 Mb for distillate. PADD 2, Cushing, and PADD 3 above/near 5y highs. Cushing stocks expected to draw this month. End-Mar stocks: crude high in US, tight in Eur, av in Japan. Gasoil/diesel tight in US/Eur, av in Japan. Technicals, managed money, and refining margins are all neutral. But geopolitics is bullish. Technicals changed from bearish to neutral. Managed money is neutral for WTI. WTI + 12k to 194k. RBOB - 3k to 37k. HO + 1k to - 17k. Neutral for WTI; bullish for RBOB and HO. In the latest snapshot, the skew for Brent crude options is slightly bullish. We score it broadly neutral. Neutral for Brent, as prices for the June 13 contract are nearing channel resistance at $104.70/105.00. Refining margins have stabilized and geopolitical risk is higher, due to Syria and Iraq. Global cracking margins stabilizing at 5 y av. Strong in US, but weak in Europe and Asia. Sharp escalation of Shiite/Alawite vs. Sunni fighting in Syria and Iraq last week. After Assad apparently used chemical weapons, the US is thinking about arming rebels in Syria and discussing airstrikes with European allies. Israel conducted 2 airstrikes on Syria on Fri and Sun, including a strike on Iranian missiles intended for Hezbollah. Israel is sending a message to Iran/Hezbollah on the nuclear issue. Bloomberg: of 34 analysts surveyed on WTI, 12 were bullish, 16 were bearish, and 6 were neutral. Neutral. But gradually more bullish as May progresses, on seasonally higher crude buying.
Geopolitical outlook
Forecasters' surveys NEAR-TERM DIRECTION

06 May 2013
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Editorial
Editorial
Crude oil prices have tentatively bottomed out and started to recover
Since the low points of mid-April, crude prices have rebounded by $8, with front-month ICE Brent currently trading around $105.50 and NYMEX WTI around $95.75. The WTI vs. Brent differential is around $9.50, compared to $11 in mid-April; it narrowed to under $9 in recent days, but has fallen back slightly. Key product cracks versus Brent have eroded over the same time frame, with ICE gasoil falling from $12-13 to $10-11, NYMEX heating oil dropping from $18 to $17, and NYMEX RBOB easing from $15.50 to $14.50. Residual fuel oil cracks have strengthened, due to seasonally lower refinery runs. Overall refining margins remain relatively strong in the US and weak in Europe and Asia, but the key message for refining margins is that they appear to have stabilized. The tighter product balances that result from refinery maintenance season have finally had an impact.
A macro tug of war for oil prices: bearish data can be bullish sometimes
Coming back to crude oil, after two months where the macro data was mixed to bearish, helping to push down prices, the markets are now seeing an opposing force, which is that central banks are clearly demonstrating their intention to keep easing and to keep providing liquidity for the markets. Both forces can be seen just in the last two weeks. Two weeks ago, the forward-looking PMIs for the US, Europe, and China all came in below expectations, showing decelerating growth. Last week, the Fed shifted to a neutral stance and the ECB cut rates. In addition, the key US non-farm payrolls report for April was solid, and was accompanied by significant upward revisions for the previous two months. In a sense, the opposing macro forces are simply the latest revival of an award-winning Broadway play that weve seen before. Sometimes bearish macro data can be bearish, if the market focuses on what it means for oil fundamentals; sometimes bearish macro data can be bullish, if the market focuses on the central bank reaction, which is more cheap and easy liquidity. Stepping back, this tug of war has been one of the reasons behind the recent increase in crude price volatility and the recent increase in the importance of risk appetite swings for oil price formation. Our view is that this is likely to continue, at least until the state of the global economy becomes more clear to the markets. economy will be stronger in H2 13 than in H1 13. We believe that the global
Focus on Brent: June Atlantic Basin sweet crude tighter than May, which should be gradually bullish in the coming weeks
In the last Oil Drivers report, we suggested that the strong seasonality in global refinery crude runs, which increase by 2.8 Mb/d between April and July, would ultimately put a floor under prices and then cause them to rebound. However, we cautioned that the key drivers of Atlantic Basin sweet crude supply and demand did not show any tightening in May vs. April, so there would not be any uplift in April, at least not driven by fundamentals. (May barrels trade in April.) We still believe in the power of refinery crude buying. And now, two weeks later, a preliminary look at the June vs. May Atlantic Basin sweet crude drivers does show significant tightening, to the tune of 660 kb/d. The table is shown on the first page of this report. On the supply side,
06 May 2013
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Editorial
the loadings programs for Nigeria and Angola show a decrease of 320 kb/d in June. On the demand side, US and European crude runs are expected to increase by 340 kb/d. The data is still partial. We do not have figures for North Sea loadings (expected in the next 710 days); however, oilfield maintenance starts in the North Sea in June and we do know, for example, that Ekofisk loadings will be down, due to downtime in that system. We conservatively assume flat North Sea supply in June vs. May, but it is likely to be lower. Similarly, on the demand side, we do not have figures for West Africa to Asia flows. Again, we conservatively assume steady flows in June vs. May, but with refinery demand picking up in Asia, the pull on West African crude is likely to be higher, not lower. As a result, at this point, it is hard for us to see a scenario where June Atlantic Basin sweet crude does not tighten significantly vs. May. We reiterate our view that as we progress through May, we should see fundamentally-driven upward pressure on the front of the Brent forward curve. What could work against this fundamental pressure? In a word: non-fundamentals. As discussed above, risk appetite has returned to the oil markets as a bullish factor. In addition, the recent sharp escalation in the fighting in Syria and Iraq, underscored by the Israeli airstrikes on Syria, has increased the geopolitical risk premium in the oil markets (see Scoreboard). If risk appetite swings the other way or geopolitical risk cools off, there could be bearish non-fundamental price pressure to offset bullish fundamentals pressure. In addition, we have to mention that many in the market are very aware that in the each of the last three years, selling in May has been a very good idea. Weve had a lot of questions on this from clients, and we have two answers. First: t his is not analysis, merely observation of a pattern. Second: we do believe in a springtime correction but this year, it has happened already. Regardless, the worry is out there, and it may be enough to at least cause buyers to be reluctant or hesitant, even if the fundamentals firm up as we expect.
US product demand +60 kb/d y-o-y in Jan-Apr, right in line with our expectations
20.0
Mb/d
2011 19.5 2012 2013
19.0
18.5
18.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: US EIA, SG Cross Asset Research
Focus on WTI: markets focused right now... and not looking ahead to bearish pressures when supply will outpace pipelines
As noted above, WTI has continued to strengthen vs. LLS and Brent. There have been a couple of good reasons for this. First, the Longhorn pipeline from the West Texas Permian Basin to the USGC started up two weeks ago, with initial flows at 75 kb/d through May, then 06 May 2013
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Oil Drivers
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Editorial
ramping up to 225 kb/d in Q3. This crude has, until now, gone to Cushing; by going to the USGC instead, it is tightening up the storage hub. Another factor behind the strength in WTI was that in the last 7-14 days, there have been reports that flows on the 180 kb/d BP1 pipeline from Cushing to the BP refinery at Whiting, Indiana have resumed, at up to 150 kb/d. The 405 kb/d refinery has been down since last November for a major upgrade on the crude distillation unit. The CDU upgrade is meant to lift the capacity of the refinery to run inexpensive heavy sour Canadian crude from 80 kb/d to 350 kb/d. Though BP continues to say that the project is on track for a H2 start-up, wire service reports today indicated that the start-up may take place as soon as end-May or, more likely, June. As the refinery ramps up, a process which will probably take some time, crude demand will increase. Most of the incremental demand will be for heavy sour Canadian, not light sweet US midcontinent crude. However, doing the simple arithmetic, Whiting will still run up to 55 kb/d of light sweet, if it is at capacity. This is a significant increment. Recent flows of up to 150 kb/d may have been to rebuild stocks at the plant; we also note that the proportion of sweet vs. sour in recent flows is not known. Indeed, Cushing holds both types of crude, and while we do know Cushing stocks, the proportion of sweet vs. sour stocks is also not known. In contrast to Brent, where we are bullish for the coming months, our outlook for WTI is neutral to bearish. We continue to believe that WTI has narrowed too far and too fast vs. LLS and Brent. The market does not appear to be looking ahead to the fact that after Longhorn, Whiting, and a small increment from the first phase 90 kb/d Permian Express, scheduled for this quarter, there are no more significant pipeline start-ups scheduled until December, when the 700 kb/d Keystone Marketlink line is due onstream (former Keystone XL southern leg). In the meantime, the relentless US supply growth of around 1 Mb/d annually will continue, which should put downward pressure on WTI once again. The wildcard, and a bit of an unknown, is rail capacity growth from the Cushing area to the USGC. Even here, we note that rail transportation costs on this route are around $10/bbl. WTI cannot really narrow further vs. LLS or rail flows will be uneconomic and this crude will start to pile up at Cushing. As supply pressures resume, we expect WTI vs. Brent to widen out again to $10-15 in Q3 13.
US product demand flat to slightly higher vs. last year, as expected

Finally, while we are on the subject of the US, we note that US product demand has been unspectacular but resilient, as shown on the chart on the previous page. The final monthly data for February show total demand of 18.7 Mb/d, a 100 kb/d y-o-y contraction. Our adjusted estimates (weekly data minus the 3-month average of weekly to monthly revisions) for March and April show demand of 18.4 Mb/d (+160 kb/d) and 18.1 Mb/d (-185 kb/d). Looking at the last three months, gasoline demand has been down compared to a year ago; distillate demand (road diesel plus heating oil) has been flat; and the growth continues to come from propane and other relatively cheap products derived from natural gas. All told, for the first four months of the year, average growth has been 60 kb/d, which is right in line with our forecasts for 2013 as a whole. In our last report, we said that we did not see any cyclical or structural weakness in Chinese demand. Here, we can say the same thing for US demand. We reiterate our view that, aside from underperforming Europe, the fundamental demand weakness seen in recent months has been seasonal and temporary, not cyclical or structural.
06 May 2013
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Crude Oil Prices & Curves
Crude Oil Prices & Curv es
World crude oil benchmarks (USD/b)
Brent - Dubai spread (USD/b)
$ 130 $ 120 $ 110 $ 100 $ 90

$ 80
WTI
Brent
Dubai
$ 70 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
$6 $5 $4 $3 $2 $1 $0 -$ 1 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Source: NYMEX, ICE, Platts & SG Cross Asset Research
Source: ICE, Platts & SG Cross Asset Research
ICE Brent forward curve (USD/b)

latest last w eek last month
NYMEX WTI forward curve (USD/b)

latest $ 98
$ 94
last w eek
last month
$ 114 $ 110 $ 106

$ 102 $ 98
$ 90
$ 86
$ 94 $ 90 Jun-13 $ 82 Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Source: ICE & SG Cross Asset Research
Source: NYMEX & SG Cross Asset Research
ICE Brent implied volatility curve (%)

22%
21% 20% 19% 18%
ICE Brent implied probability indicator (front month)

Last Month
Latest
Last w eek
50% 40% 30% 20% 10% 0%
This Week
Last Week
17% 16% JUN13
DEC13
JUN14
DEC14
JUN15
DEC15
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Refined Products Prices
Refined Products Prices
NYMEX RBOB price (USD/g)
NYMEX RBOB crack (USD/b)
$ 3.50 $ 3.30 $ 3.10 $ 2.90

$ 2.70
$ 2.50 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
$ 50 $ 45 $ 40 $ 35 $ 30 $ 25 $ 20 $ 15 $ 10 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
NYMEX Heating oil price (USD/g)
NYMEX Heating oil crack (USD/b)
$ 3.50 $ 3.30 $ 3.10 $ 2.90

$ 2.70
$ 2.50 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
$ 50 $ 45 $ 40 $ 35 $ 30 $ 25 $ 20 $ 15 $ 10 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
ICE Gasoil price (USD/t)
ICE Gasoil crack (USD/b)
$1 050 $1 000 $ 950
$ 24 $ 20 $ 16
$ 900
$ 850
$ 12 $8 Jan-12
$ 800 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
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Freight Rates & Arbitrages
Freight Rat es & Arbitrages
Crude oil: Europe to US net arbitrage (USD/b)
Gasoline: Europe to US net arbitrage (USD/b)
-$ 5 -$ 10 -$ 15 -$ 20
-$ 25
Paper Crude Arb
Physical Crude Arb
-$ 30 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
$ 20 $ 15 $ 10 $5 $0 -$ 5 -$ 10 -$ 15 -$ 20 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Source: Platts & SG Cross Asset Research
Heating oil: US to Europe net arbitrage (USD/b)
Fuel oil: Europe to Singapore net arbitrage (USD/b)
$1 -$ 1 -$ 3 -$ 5 -$ 7
-$ 9
$8 $6 $4 $2 $0
-$ 2
-$ 11 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
-$ 4 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Source: Bloomberg & SG Cross Asset Research
Freight cost for crude oil main routes (USD/b)

ME - Japan 260k ME - R'dam 280k Ras Tanura - USGC 280k
Rotterdam to New York clean tanker freight TC2 (USD/b)
$ 3.00 $ 2.50 $ 2.00

$ 1.50
$ 4.0 $ 3.6 $ 3.2 $ 2.8 $ 2.4

$ 2.0
Apr-12 Jul-12 Oct-12 Jan-13 Apr-13
$ 1.00 Jan-12
$ 1.6 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Source: Reuters & SG Cross Asset Research
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Refining Margins
Refini ng Margins
US LLS cracking margins (USD/b - 5-days m a)

08 to 12 30 25
20
Rotterdam Brent cracking margins (USD/b - 5-days m.a)

08-12 av.
2012
2013
08 to 12
2012
2013
08-12 av.
15
10 5
15
10
5 0
-5
0 -5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Med. Urals cracking margins (USD/b - 5-days m.a)

08 to 12 20 15
10 5 0
Singapore Dubai cracking margins (USD/b - 5-days m.a)

08 to 12
10 8
2012
2013
08-12 av.
2012
2013
08-12 av.
6 4 2 0 -2
-5 -10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Singapore Dubai topping margins (USD/b - 5 days m.a.)

08 to 12
8
World cracking margins (USD/b - 5-days m.a)

08 to 12 15 10 2012 2013 08-12 av.
2012
2013
08-12 av.
6 4 2 0
0
5
-2 -4
-5
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NYMEX Managed Money & Open Interest
NYMEX M anaged Money & Open Inter est
Managed money net position on NYMEX Crude oil (Mb)

k lots 300 250
200
Managed money net position on NYMEX RBOB (Mb)

k lots 120
Mngd money net pos. on WTI (Mb) WTI (NYMEX)
150 100
50
0 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
USD/b 110 105 100 95 90 85 80 75 70 65 60 Apr-13
Mngd money net pos. on RBOB (Mb) RBOB (NYMEX)
USD/gal 3.5 3.1
100
80
60 40
2.7 2.3
20
0 Jan-12
1.9 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13
Source: US CFTC, NYMEX & SG Cross Asset Research
Managed money net position on NYMEX Heating oil (Mb)
Managed money net position on NYMEX Crude & Products (Mb)

k lots 450 400 350 300 250 200 150 100 50 1.8 0 Jan-12 Mngd money net pos. on Crude & Products USD/b WTI (NYMEX) $ 115
$ 105 $ 95
k lots 60 50 40
30
Mngd money net pos. on HO (Mb) HO (NYMEX)
USD/gal 3.4 3.0 2.6 2.2
20
10
$ 85 $ 75 $ 65 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13
0
-10
-20 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Managed money share in crude total open interest (%)

30%
Total Open Interest on Nymex WTI (Mb)

2000 M1 to M3 M4 to M12 M13+
Managed money Share in WTI Open Interest
28% 26%
1600 1200
24%
800 22%
20% 18% Jan-12
400 0 Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
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SG US DOE Expectations
SG US DOE E xpectations
SG US DOE Forecasts
Assumptions Input to CDU (Mbd) Yields (%) Production (Mbd) Imports (Mbd) Exports (Mbd) Deliveries (Mbd) Build/(Draw) Mb Stocks Level Crude Oil (Mb) Gasoline (Mb) Distillate (Mb) SPR (Mb) Crude 15.10 na 7.32 7.55 0.04 na -0.2 This week 395.1 217.4 115.2 696.0 Gasoline na 59.0% 8.91 0.75 0.49 8.65 1.5 Last week 395.3 216.0 115.8 696.0 Distillate na 29.5% 4.45 0.15 1.00 3.70 -0.6 Last year 379.5 207.1 120.8 696.0
US commercial crude stocks (Mb)

08 to 12 420 400 380
360 340
2012
2013
08-12 av.
320 300 280

Source: US DOE Weekly & SG Cross Asset Research
US gasoline stocks (Mb)

08 to 12 2012 2013 08-12 av.
US distillate stocks (Mb)

08 to 12 2012 2013 08-12 av.
245
235
180 170 160

150 140 130
225 215
205
195
185
120 110 100
175 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Product stocks (days supply cover)

08 to 12
45
Cushing crude stocks vs WTI 1st - 2nd timespread

2013 08-12 av.
2012
Mb
60
Cushing crude stocks (LHS) WTI 1st-2nd nearby (RHS)
US$/b
$ 0.3
50
40
$ 0.1 -$ 0.1 -$ 0.3 -$ 0.5 -$ 0.7 -$ 0.9 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13
40
30
35
20 10
0 Jan-12
Source: US DOE Weekly, NYMEX & SG Cross Asset Research
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Stocks in ARA & Singapore
Stocks i n A RA & Singapore
Gasoline stocks in ARA (Mb)

08 to 12
10
Gasoil stocks in ARA (Mb)

2013 08-12 av.
2012
08 to 12 23 21
19
2012
2013
08-12 av.
9
8
7
6
17 15
13
5 4 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: PJK International Limited & SG Cross Asset Research
11 9
7
Jet kerosene stocks in ARA (Mb)

08 to 12 8 7
6 5 4 3 2
Residual fuel oil stocks in ARA (Mb)

2013 08-12 av.
2012
08 to 12 8 7
6
2012
2013
08-12 av.
5 4 3 2
1 0
Jet kerosene & gasoil stocks in Singapore (Mb)

08 to 12 18
16
Residual fuel oil stocks in Singapore (Mb)

08-12 av.
26 24
22 20 18
2012
2013
08 to 12
2012
2013
08-12 av.
14
12
10 8
6
16 14 12
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Stocks in Japan
Stocks i n J apan
Japan crude stocks (Mb)

08 to 12 120 115 110 105 2012 2013 08-12 av.
Japan gasoline stocks (Mb)

08 to 12 2012 2013 08-12 av.
17 16 15
14 13
100 95 90 85
Source: Petroleum Association of Japan, SG Cross Asset Research
12 11 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Japan diesel & gasoil stocks (Mb)

08 to 12 2012 2013 08-12 av.
Japan jet kerosene stocks (Mb)

08 to 12 35 30 25 2012 2013 08-12 av.
16 14
12
20 10
15 10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Japan residual fuel oil stocks (Mb)

08 to 12 29 27 25 23 21
19 17
Japan unfinished products stocks (Mb)

2013 08-12 av.
65
60 08 to 12 2012 2013 08-12 av.
2012
55
50
45 40
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SG Price Forecasts - 20/03/13
SG Pri ce Forecasts - 20/ 03/ 13
SG Supply/Demand Forecasts
Mb/d 2010 46.2 42.2 88.4 52.6 5.3 29.3 87.2 -1.1 79.61 80.34 2011 46.4 42.4 88.8 52.8 5.8 29.9 88.4 -0.4 95.11 110.90 1Q 12 46.3 42.6 88.9 53.4 6.0 31.3 90.8 1.8 102.93 118.35 2Q 12 45.5 43.7 89.2 52.8 6.1 31.7 90.6 1.4 93.49 108.90 3Q 12 45.9 44.3 90.2 53.0 6.3 31.5 90.7 0.5 92.10 109.24 4Q 12 46.3 44.7 91.0 54.2 6.3 30.9 91.4 0.4 88.18 110.08 2012 46.0 43.8 89.8 53.4 6.2 31.4 90.9 1.0 94.18 111.64 1Q 13f 46.1 44.0 90.1 54.3 6.3 30.3 90.8 0.6 93.72 113.13 2Q 13f 45.0 45.0 90.0 54.4 6.3 30.0 90.7 0.7 91.50 109.00 3Q 13f 45.7 45.7 91.4 54.3 6.4 31.0 91.7 0.4 98.67 113.67 4Q 13f 46.3 46.0 92.3 55.2 6.4 30.8 92.3 0.0 99.83 112.33 2013f 45.8 45.2 91.0 54.5 6.3 30.5 91.4 0.4 95.93 112.03
OECD demand Non-OECD demand

World demand
*Non-OPEC supply *OPEC NGLs *OPEC crude

World supply
Stock change WTI NYMEX ($/bbl) Brent ICE ($/bbl)
Source: Historical data IEA. Forecasts SG Cross Asset Research. Note: IEA historical data is based on the monthly Oil Market Report dated 20 March 2013. Non-OPEC supply includes processing gains and biofuels
SG Europe Price Forecasts

2011 1Q 12 118.4 992.7 1062.1 1015.4 1060.2 715.7 686.0 7.3 2Q 12 108.9 925.4 1030.9 878.7 993.8 665.4 625.5 10.1 3Q 12 109.2 945.7 1064.3 908.3 1023.9 673.5 620.4 12.7
Brent ICE Gasoil IPE Gasoline NWE FOB Barge Naphtha CIF NWE Physical Jet Fuel NWE CIF Cargo Fuel Oil 1% NWE FOB Cargo Fuel Oil 3.5% Rotterdam FOB barges 5-2-2-1 crack
US$/b US$/t US$/t US$/t US$/t US$/t US$/t US$/b
110.9 933.0 985.1 931.2 1015.1 636.4 609.1 5.4
4Q 12 110.1 948.8 988.3 941.3 1025.8 615.9 589.0 6.6
2012 111.6 953.2 1036.4 935.9 1025.9 667.6 630.2 9.2
1Q 13f 113.1 969.8 1056.8 958.9 1052.2 648.5 616.0 8.9
2Q 13f 109.0 931.3 1032.1 901.0 1001.3 628.7 596.9 9.2
3Q 13f 113.7 966.0 1037.8 940.7 1046.0 658.3 626.5 7.6
4Q 13f 112.3 963.5 1000.9 963.3 1038.5 649.8 618.1 6.8
2013f 112.0 957.6 1031.9 941.0 1034.5 646.3 614.4 8.1
Source: History - Platts. Forecasts - SG Cross Asset Research
SG US Price Forecasts
2011
WTI NYMEX Heating Oil NYMEX Gasoline NYMEX Naphtha USGC Waterborne Jet Fuel 54 USGC #6 Fuel Oil 1% NYH 3-2-1crack
US$/b US cpg US cpg US cpg US cpg US$/b US$/b
95.1 295.6 282.2 267.5 299.5 99.0 25.3
1Q 12 102.9 315.6 305.0 290.3 318.5 111.6 26.6
2Q 12 93.5 289.6 295.2 263.7 295.7 105.6 29.7
3Q 12 92.1 300.0 294.4 275.6 307.1 104.8 32.3
4Q 12 88.2 304.9 273.2 279.6 299.9 99.0 31.0
2012 94.2 302.5 291.9 277.3 305.3 105.3 29.9
1Q 13f 93.7 308.9 295.4 292.7 314.0 103.2 32.2
2Q 13f 91.5 307.1 301.2 277.4 311.1 100.5 35.8
3Q 13f 98.7 306.3 294.4 294.4 312.3 107.7 26.7
4Q 13f 99.8 303.2 273.4 297.2 305.2 108.8 19.2
2013f 95.9 306.4 291.1 290.4 310.7 105.1 28.5
SG Singapore Price Forecasts

Dubai Tapis Gasoil 0.5% Jet Fuel Fuel Oil 180 CST 180 CST - 3.5% Rotterdam Fuel Oil 380 CST
US$/b US$/b US$/b US$/b US$/t US$/t US$/t 2011 106.2 117.1 124.5 125.6 648.7 39.6 638.5 1Q 12 116.1 125.7 132.5 131.8 734.4 48.4 722.4 2Q 12 106.4 114.8 121.7 122.3 667.2 41.7 656.3 3Q 12 106.1 112.3 125.3 126.2 658.3 37.9 645.1 4Q 12 107.5 114.9 125.0 126.7 625.5 36.5 615.8 2012 109.0 116.9 126.1 126.8 671.3 41.1 659.9 1Q 13f 108.5 118.6 128.8 129.8 639.8 23.8 636.7 2Q 13f 104.5 114.0 122.2 122.7 631.9 35.0 623.7 3Q 13f 109.7 118.7 127.2 127.7 666.5 40.0 657.5 4Q 13f 108.3 117.3 126.8 127.8 663.1 45.0 653.1 2013f 107.8 117.2 126.2 127.0 650.3 35.9 642.8
06 May 2013
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Research Contacts
Res ear ch Contacts
Global Head of Research Patrick Legland (33) 1 42 13 97 79

patrick.legland@sgcib.com
CROSS ASSET RESEARCH COMMODITIES GROUP

Head of Commodities Research Dr. Michael Haigh (1) 212 278 6020
michael.haigh@sgcib.com
Paris European Gas & LNG Dr. Thierry Bros (33) 1 58 98 11 70

thierry.bros@sgcib.com
European Power, Coal and Carbon Paolo Coghe (33) 1 42 13 42 47

paolo.coghe@sgcib.com
London Coordinator Global Technicals Stephanie Aymes (44) 207 762 5898
stephanie.aymes@sgcib.com
Cross Commodity Strategy Jesper Dannesboe (44) 207 762 5603

jesper.dannesboe@sgcib.com
Metals Robin Bhar (44) 207 762 53 84

robin.bhar@sgcib.com
Singapore Cross Commodity Strategy Mark Keenan (65) 6326 7851

mark.keenan@sgcib.com
New York US Natural Gas Laurent Key (1) 212 278 57 36

laurent.key@sgcib.com
Oil & Products Michael Wittner (1) 212 278 64 38

michael.wittner@sgcib.com
Agriculture Christopher Narayanan (1) 212 278 6773

christopher.narayanan@sgcib.com
Hong Kong Cross Commodity Strategy Jeremy Friesen (852) 2166 4454
jeremy.friesen@sgcib.com
06 May 2013
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Disclaimer
Disclaimer
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COMMODITIES 06 May 2013

Extract from a report

Oil market scoreboard (see full scoreboard on next page)

Atlantic Basin sweet crude (Mb/d) tightening in June vs. May

3 month price history

102.77 93.93 847.00 277.31 285.24

97.69 86.68 822.75 271.90 273.46

118.90 97.77 1030.75 320.35 323.84

Forecasts vs forward price

109.0 91.5 931 301 307

113.7 98.7 966 294 306

12% 5% 14% 10% 7%

112.3 99.8 964 273 303

supply change - dem and change

Source: SG Cross Asset Research, Date of price forecasts: 20 March 2013

Please see disclaimer and disclosures at the end of this document

Oil market scoreboard

Forecasters' surveys NEAR-TERM DIRECTION

US product demand flat to slightly higher vs. last year, as expected

Crude Oil Prices & Curves

Crude Oil Prices & Curv es

World crude oil benchmarks (USD/b)

Brent - Dubai spread (USD/b)

$ 130 $ 120 $ 110 $ 100 $ 90

Source: NYMEX, ICE, Platts & SG Cross Asset Research

Source: ICE, Platts & SG Cross Asset Research

ICE Brent forward curve (USD/b)

NYMEX WTI forward curve (USD/b)

$ 114 $ 110 $ 106

Source: ICE & SG Cross Asset Research

Source: NYMEX & SG Cross Asset Research

ICE Brent implied volatility curve (%)

ICE Brent implied probability indicator (front month)

50% 40% 30% 20% 10% 0%

17% 16% JUN13

Source: SG Cross Asset Research

Refined Products Prices

Refined Products Prices

NYMEX RBOB price (USD/g)

NYMEX RBOB crack (USD/b)

$ 3.50 $ 3.30 $ 3.10 $ 2.90

Source: NYMEX & SG Cross Asset Research

Source: NYMEX & SG Cross Asset Research

NYMEX Heating oil price (USD/g)

NYMEX Heating oil crack (USD/b)

$ 3.50 $ 3.30 $ 3.10 $ 2.90

Source: NYMEX & SG Cross Asset Research

Source: NYMEX & SG Cross Asset Research

ICE Gasoil price (USD/t)

ICE Gasoil crack (USD/b)

$1 050 $1 000 $ 950

Source: ICE & SG Cross Asset Research

Source: ICE & SG Cross Asset Research

Freight Rates & Arbitrages

Freight Rat es & Arbitrages

Crude oil: Europe to US net arbitrage (USD/b)

Gasoline: Europe to US net arbitrage (USD/b)

Paper Crude Arb

Physical Crude Arb

Source: Platts & SG Cross Asset Research

Source: Platts & SG Cross Asset Research

Heating oil: US to Europe net arbitrage (USD/b)

Fuel oil: Europe to Singapore net arbitrage (USD/b)

Non-OPEC supply OPEC NGLs *OPEC crude