1 / 24

War Room 24 Jan 2012 Got Oil?

War Room 24 Jan 2012 Got Oil?. War Room. Monthly macro discussion Using tools in context Update on HiddenLevers Features Your feedback welcome. Got Oil?. Oil Technicals Oil Fundamentals Macro – Iran, the West + Asia. HiddenLevers. Oil – Technicals. Oil Shocks + Recessions - Link.

mauve
Download Presentation

War Room 24 Jan 2012 Got Oil?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. War Room 24 Jan 2012 Got Oil?

  2. War Room • Monthly macro discussion • Using tools in context • Update on HiddenLevers Features • Your feedback welcome

  3. Got Oil? • Oil Technicals • Oil Fundamentals • Macro – Iran, the West + Asia

  4. HiddenLevers Oil – Technicals

  5. Oil Shocks + Recessions - Link 1974 – 1980 – 1990 – 2000 (even 2000!) – 2008 no coincidence

  6. Oil – Technical Outlook • Short Term • autumn rally from $75 to $100 • heavy resistance at 100usd mark • oil not backing down from 100usd • as below, so above – 125usd Oil • Long Term • 115usd – Arab spring double top • correction pattern since then • solid support at 92/93usd • - break of 92 = oil likely revisits 74usd and below

  7. Oil – Technical Outlook • EU sanctions against Iran baked in • 98-99usd on WTI today (24/Jan) • 110-111usd on Brent (24/Jan) • Fourth loss in five sessions What does this tell you? EU debt overshadows the Iran soap opera!

  8. HiddenLevers Oil – Fundamentals

  9. Oil Trends: WTI Oil vs Brent Oil WTI and Brent diverged in 2011, but spread has narrowed

  10. Oil: Top 5 Producers and Consumers Top 5 Oil Producers: • Russia - 10.3M bpd • Saudi Arabia - 10M bpd • USA - 7.5M bpd • Iran – 4.2M bpd • China – 4.1M bpd Top 5 Oil Consumers: • USA – 19.1M bpd • China – 9.1M bpd • Japan – 4.5M bpd • India – 3.3M bpd • Russia – 3.2M bpd US consumption roughly equals other top 5 combined Source: BP Stat. Review of World Energy 2011

  11. US Demand Trends International Demand: China + India Auto Markets Latest EIA / IEA Global Demand Projections Oil Fundamentals: Demand

  12. US Oil Demand Trends Oil Consumption down since 2005 (pre-recession) Vehicle-miles down since 2007 Source: US DOT and EIA

  13. Oil Demand: China + EM Auto China became #1 auto market in 2009, but still has only 1 cars per 25 people (US almost 1:1) Source: E2AF.com (Nikkei Business Publications)

  14. Oil Demand: China + EM Auto • China now world's largest auto market • 25 people/car in China today • 65 people/car in India today • ~1 person/car in US • If China and India rise to 5 people/car, that's 400M additional cars 400M cars = 6M bpd oil = 1.5x Iran's production Source: NYU Econ Dept, HiddenLevers

  15. Global Oil Demand Projections EIA projects 30M bpd demand increase by 2035

  16. US Supply Trends: US growth, BakkenShale Global Supply Analysis Marginal Price of Production Today Oil Fundamentals: Supply

  17. US Oil Supply Growth • US production has risen 1.6M bpd from 2008 lows • Bakken growth accounts for 400k bpd of growth • If US surpassed old peak over 11M bpd, would still have to import 8M bpd

  18. HiddenLevers analyzed world production data in 2009 and 2011 Classified countries into post-peak or still growing Global Supply Analysis 2009: 14 Countries Growing With 40% of world oil production 2011: 12 Countries Growing With 22% of world oil production Source: HiddenLevers, BP Statistical Review of World Energy

  19. Oil Supply: Marginal Production Cost What does Oil really cost? Saudi Arabia: $20/bbl Exxon Mobil: $71/bbl CERA Research: $60-90 for new offshore, oil sands, etc Chart depicts CERA-estimated production costs for various regions Source: SEC 10-K Filings, Cambride Energy Research Associates

  20. HiddenLevers Oil – 2012 Macro Situation

  21. Dec 2011 US Decoupling – Dream Killers • Europe – counterparty risk • Deflation – USD too strong for growth • China hard landing – 50% of world econ growth • Iran + Oil – oil shocks lead to recession

  22. Embargo against Iran Who consumes Iran’s oil? China 20% Japan 17% India 16% South Korea 9% Asia total 70+ % EU 20% Source: Bureau of Labor Statistics • “EU sanctions aimed at avoiding conflict” – British Foreign Secretary William Hague • China + India + Russia not joining sanctions = sanctions pitting Asia against the West EU sanctions ineffective!

  23. Scenarios – Iran blockade vsArmed conflict Scenario: Iran Blockade of Straits of Hormuz: Current Projected Impact Oil $100 $125 25% Airline Traffic Growth 1.24% -3% -4.24% DOD Budget Growth 2.10% 3% 1% Tanker Rates $18700 $940 -95% Durable Goods 12.1% 12.5% 0.4% Scenario: Armed Conflict with Iran Current Projected Impact Oil $100 $190 90% Airline Traffic Growth 1.24% -11% -12% DOD Budget Growth 2.10% 5.38% 3.28% Tanker Rates $18700 $940 -95% Durable Goods 12.10% 14.7 2.6% Consequences: World issue, not just the US: 1/3 of seaborne oil, 1/5 of total oil trade 2. Blockade requires a US government response 3. US war ships already in gulf – more coming 4. 125-150usd potential (WTI) Consequences: Israel armed conflict just as likely as US China = ex factor – Darth Vader dilemma 200usd potential (WTI) Safety in CAD?

  24. HiddenLevers - New Features • Portfolio Stress Test Report v2 • New Asset Types in Screeners • New currencies added to Scenario Modeling • PDF visuals improved • Coming soon: • Fixed Income Support

More Related