OIL PRICES Developments and Effects. Mag. Johannes Benigni, January 2001 PVM Oil Associates - Vienna Strategic Energy Services

Transcription

1 OIL PRICES Developments and Effects Mag. Johannes Benigni, January 2001 PVM Oil Associates - Vienna Strategic Energy Services

2 PRICE MOVERS Gasoil 0.2 FOB Barges [USD/mt mt] Rigid Emission Controls Just in time Inventory Policy Seasonal Product Mix OPEC Slowdown in Demand High Freight Rates Short-term Fall in Upstream Investment Refinery Capacity Speculation (Lower Prices Heating Oil)

3 SUPPLY & DEMAND Demand increase continues to slide mainly due to slow down in US economy. OPEC Supply: For first time in history remains below its quotas. Production cuts a proactive decision. Real Output Curbs less than on Paper. Non Non-OPEC Supply: Increase does not correspond to rising prices. S&D Data accuracy

4 Woldwide Consumption Europe FSU North America Middle East Latin America Africa Asia Pacific

5 Global Oil Demand [mbpd] e 1Q 2Q 3Q 4Q Yearly Average

6 Oil demand per region [mbpd] Oil demand (mbpd) Annual change (%) North America % 1.89% 3.20% 0.84% 2.08% Latin America % 7.69% 0.21% 1.47% 3.10% Europe OECD % 1.93% -1.05% -0.33% 1.53% Europe non-oecd % -1.30% -2.63% 1.35% 1.33% Pacific % -6.24% 2.62% 0.23% 3.24% FSU % % -6.17% -0.29% -2.01% China % 2.70% 6.92% 6.92% 6.05% Other Asia % 0.30% 4.30% 2.56% 4.99% Middle East % -0.48% 2.16% 1.88% 3.92% Africa % 1.29% -1.28% 0.86% 2.14% World % 0.12% 1.65% 1.15% 2.57%

7 World Oil Demand [mbpd] % % % % % % Source: IEA e 2001e

8 in mbpd World Oil Demand 2001 [mbpd] Demand as expected in Demand as expected in Net Change Change in % July 2000 November 2000 N. America % OECD Europe % OECD Asia-Pacific % FSU % Non-OECD Europe % China % Other asia % L. America % Middle East % Africa % World %

9 HISTORICAL PRICE DEVELOPMENT US$ price neutral zone Sweet Sour Differentials International Oil Flows Increasing US Dependence on Foreign Oil (56.6% of the crude consumed by Americans in 2000 foreign) Sharp Drop in the US Gasoline Production due to high MTBE prices (Dec 2000: minus 600,000 bpd, RFG: minus 50%)

10 45 Historical Crude Price Development Brent Dated [USD/bbl] Neutral Zone

11 8 NYMEX WTI and Dubai FM vs Dated Brent [US$/bbl] 6 WTI vs Brent Dated Dubai vs Brent Dated -6-8 Jan 99 Feb 99 Mar 99 Apr 99 May 99 Jun 99 Jul 99 Aug 99 Sep 99 Oct 99 Nov 99 Dec 99 Jan 00 Feb 00 Mar 00 Apr 00 May 00 Jun 00 Jul 00 Aug 00 Sep 00 Oct 00 Nov 00 Dec 00 Jan 01

12 Gasoil 0.5 Singapore vs FOB MED [US$/mt] 60 Arbitrage May 1993 Nov 1993 May 1994 Nov 1994 May 1995 Nov 1995 May 1996 Nov 1996 May 1997 Nov 1997 May 1998 Nov 1998 May 1999 Nov 1999 May 2000 Nov 2000

13 OPEC OPEC reached its limits in 2000 Real expected production cuts less than announced. Iraq remains a wild card. Mulling Changes in its Price Band OPEC as Swing Producer

14 OPEC's Production 2000 [mbpd] in mbpd Quota Jul 00 Sep 00 Quota Oct 00 Oct 00 Quota Nov 00 Nov 00 Algeria Indonesia Iran Kuwait Libya Nigeria Qatar Saudi Arabia UAE Venezuela OPEC excl. Iraq Iraq Total OPEC incl. Iraq

15 Aug 00 Sep 00 Oct 00 Nov 00 OPEC's Quotas and Production [mbpd] OPEC's Quota OPEC-10 Production Apr 99 May 99 Jun 99 Jul 99 Aug 99 Sep 99 Oct 99 Nov 99 Dec 99 Jan 00 Feb 00 Mar 00 Apr 00 May 00 Jun 00 Jul 00

16 OPEC Oil Production excl. NGLs [mbpd] OPEC incl. Iraq OPEC excl. Iraq Feb.98 Jun.98 Oct.98 Feb.99 Jun.99 Oct.99 Feb.00 Jun.00 Oct

17 Saudi and World Oil Reserves 20.31% Saudi Arabia

18 NON-OPEC OPEC PRODUCTION Upstream Spending: 1998 = -9 % 1999 = -18 % 2000 = % 2001 = % Lack of skilled workers putting brakes on non-opec production increase. Non Non-Opec Production Increase 2000 = 1.2 % 2001 = 0.7 % Increase in 2001 < Increase in 2000

19 2400 Worldwide Rig Count Jan.98 Apr.98 Jul.98 Oct.98 Jan.99 Apr.99 Jul.99 Oct.99 Jan.00 Apr.00 Jul.00 Oct.00

20 FREIGHT RATES One third of total fleet over 15 years in new VLCCs likely to be delivered this year. About 35 VLCCs expected to be scrapped. Crude Freight Rates might go down due to lower OPEC production but no dramatic fall in prices expected.

21 World VLCC Fleet - Age Profile up to 4 years 26% Over 20 years 32% years 2% Source: Petroleum Argus 5-9 years 28% years 12%

22 Freight Rates for 80,000 Crude Carriers [US$/bbl] Novorossiysk to Augusta Ventspils to Wilhelmshaven 0.5 Jan 00 Mar 00 May 00 Jul 00 Sep 00 Nov 00 Jan 01

23 Freight Rates for 30,000 Clean Product Carriers [US$/bbl] Novorossiysk to Augusta 0.8 Ventspils to Wilhelmshaven 0.6 Jan 00 Mar 00 May 00 Jul 00 Sep 00 Nov 00 Jan 01

24 INVENTORIES OECD OECD-Stocks more comfortable but we are not out of woods. European Inventories improving. Oil prices dependent on total US-Inventory levels. Distillate inventories still 8.4 mb below the previous year s level. Gasoline stocks higher than last year s levels but MTBEs tight market likely to fuel prices in summer.

25 U.S. Crude Oil Inventory Levels ['000 bbls] 360, , , ,000 Average , , , , , Jan ,000 Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec

26 U.S. Mogas Inventory Levels ['000 bbls] 240, , , ,000 Average , , Jan ,000 Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec

27 U.S. Distillates Inventory Levels ['000 bbls] 170, , , , , Jan , Average , , ,000 80,000 Jan Feb Mar Apr Ma Jun Jul Se Oct No De

28 175,000 U.S. Distillates Inventory Levels ['000 bbls] 150, , ,000 75,

29 U.S. Total Inventory Levels ['000 bbls] 730, , , , ,000 Average , Jan , , ,000 Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec

30 550,000 U.S. Total Petroleum Inventory Levels and WTI FL [weekly] , , , , , , ,000 Total Petroleum stocks, left scale - Inverted WTI, right scale ['000 bbls] [US$/bbls] 750,

31 MARKET STRUCTURE Cash & Carry Arbitrage 1998 Backwardation

32 Dec 02 Market Structures Forward Values of Dated Brent (IPE Strip) [US$/bbl] November 2000 January Nov 00 Dec 00 Jan 01 Feb 01 Mar 01 Apr 01 May 01 Jun 01 Jul 01 Aug 01 Sep 01 Oct 01 Nov 01 Dec 01 Jan 02 Feb 02 Mar 02 Apr 02 May 02 Jun 02 Jul 02 Aug 02 Sep 02 Oct 02 Nov 02

33 Feb.99 Apr.99 Jun.99 Aug.99 Oct.99 Dec.99 Feb.00 Apr.00 Jun.00 Aug.00 Oct.00 Dec.00 Feb.01 Apr.01 Jun.01 Aug.01 Oct.01 Dec.01 Feb.02 Apr.02 Jun.02 Aug.02 Oct.02 Dec.02 Forward Values of Dated Brent (IPE Strip) [US$/bbl] Jan.99 Nov.00

34 REFINING MARGIN Increased Volatility in Refining Margins Seasonality in Margins Healthy margins in North America due to high product demand Product Specification Changes European Margins being driven by US

35 Crack [US$/mt] - Prem Unl FOB Barges vs. Brent Dated Min Max Forward Curve Cash crack aver of current month Mean Last 12 months View Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

36 130 Crack [US$/mt] - Jet CIF Cargoes NWE vs. Brent Dated Min Max Forward Curve Cash crack aver of current month Mean Last 12 months View Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

37 Crack [US$/mt] - EN590 Cargoes CIF NWE vs. Brent Dated Min Max Forward Curve Cash crack aver of current month Mean Last 12 months View Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

38 80 Crack [US$/mt] - Gasoil.2 FOB Barges Rotterdam vs. Brent Dated Min Max Forward Curve Cash crack aver of current month Mean Last 12 months View Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

39 Long Term World Oil Supply Peak Years range from 2021 to 2112 depending on different scenarios EIA / DOE scenario expects peak later than other analysts

40 USGS 5% 2000 USGS Mean 2000 USGS 95% 2000 Campbell 1995 Masters 1994 Campbell 1992 Bookout 1989 Masters 1987 Martin 1984 Nehring 1982 Halbouty 1981 Meyerhoff 1979 Nehring 1978 Nelson 1977 Folinsbee 1976 Adams & Kirby 1975 Linden 1973 Moody 1972 Moody 1970 Shell 1968 Weeks 1959 MacNaughton 1953 Weeks 1948 Pratt 1942 Published Estimates of World Oil Ultimate Recovery Source: USGS and Colin Campbell Trillions of Barrels

41 12 EIA World Conventional Oil Production Scenarios 90 USGS Estimates of Ultimate Recovery Peak Range 46 yrs or 91 yrs Billion Barrels per Year Ultimate Recovery Probability BBls Low (95 %) 2,248 Mean (expected value) 3,003 High (5 %) 3,896 History Mean Low (95 %) High (5 %) % Growth 2 % Growth 1 % Growth 0 % Growth Billion Bbls Moves Peak 10 Years From Decline R/P = Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

42 Probability of Ultimate Recovery WORLD OIL PRODUCTION SCENARIOS Ultimate Recovery (Billion barrels) Annual Production Growth Rate (Percent) Estimated Peak Year Estimated Peak Production Rate (Million barrels per year) (Million barrels per day) 95 Percent 2, , , , , , , , Mean 3, , (expected 3, , value) 3, , , , Percent 3, , , , , , , ,

43 If you have any further questions about energy price development, please do not hesitate to contact us. PVM Oil Associates GmbH Wollzeile 6-8! 1010 Vienna! Austria Tel: ! Fax: URL: International Energy Broking Consulting IT Services