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SEB Jordbruksprodukter, 25 mars 2013

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SEB Veckobrev med prognoser på jordbruksråvaror

SEB - Prognoser på råvaror - CommodityFörra veckans handel i jordbruksprodukterna påverkades endast ytligt av svallvågorna från Cypernkrisen. Priserna steg överlag på nästan alla marknader. Starkast gick vete. Jag tror att det huvudsakligen handlar om att priset fallit lite för långt ner på allt för tidigt inkasserade förhoppningar om regn i USA. Torkan i USA registrerades som något värre förra veckan än veckan innan. Europa oroar sig förvånande lite över de extremt låga utgående lager som t ex USDA har för EU-27. Lagerstatistiken som USDA publicerar på torsdag den 28 mars kan skapa en hel del volatilitet. Klockan 17 presenteras uppdaterade siffror på ”prospective plantings” för vete och majs och lagerstatistiken per den första mars.

SEB - Tendens för pris på råvaror från jordbrukVeckans Fonterra-auktion visade priser som återigen ligger rejält mycket högre än förra auktionen. Priserna på Eurex reagerade med att stiga lite grand. Pressen försöker i vanlig ordning hitta på en ”story” bakom prisuppgången. Bland annat nämns torkan i Nya Zealand (som egentligen till stor del är historia) och kinas glupande aptit på SMP (som också hör till förra året). Februaris import jämfört med samma månad förra året visar på en 17%-ig minskning).

Fram till torsdag väntar vi oss inte några stora kursrörelser. Folk kommer att trimma sina positioner för att inte drabbas av slumpen när lagerstatistiken publiceras på torsdag. Oron är att lagren ska visa sig mindre än väntat. Så har det varit 8 av 10 gånger de senaste åren. Det innebär i sig att risk/reward talar för en prisnedgång på rapportsiffrorna, allt annat lika.

Odlingsväder

US Drought Monitor visar återigen mer av USA drabbat av torka. Den 19 mars var 65% av ytan drabbad av torka. Veckan innan var det 63.7%. Extrem och exceptionell torka ökade till 16.85% av ytan från 16.51% för två veckor sedan.

Odlingsväder - US Drought Monitor

Marknaden har diskonterat att trenden har vänt till våtare väder, men detta är kanske att ropa ”hej” lite för tidigt. Kanske ligger denna tvekan om torkans nära förestående slut bakom veckans prisuppgång på spannmål.

Hela Europa har varit kallt och torrt. Det har varit kallt och torrt även i USA och i Kanada.

I Brasilien är det varmt och med mycket regn.

Vete

Priset på november (2013) rekylerade som väntat uppåt. 210 Euro bröts och även trendlinjen, motståndet för prisnedgången sedan i början av december. Detta bekräftar tekniskt att prisnedgången är över. Jag tror inte att vi kommer att få se en förlängning av den rekyl uppåt vi sett de senaste dagarna. Det är säkerligen många lantbrukare som passar på att prissäkra nu – i vart fall borde de göra det. Sidledes prisrörelse är mer trolig den närmaste tiden. Det vill säga, en liten prisnedgång i veckan som kommer, kanske ner mot 210 igen.

Vetepriset (CAX3) den 23 mars 2013

Decemberkontraktet på CBOT har stigit relativt brant. Sättet som det har skett stämmer väl överens med hur rekyler mot trenden brukar se ut. Det finns säkerligen många lantbrukare som hängt upp sig på 750 cent. Den här marknaden kommer att ha väldigt svårt att gå över den nivån om det inte kommer nya rapporter om väder och skörd som stör.

Vete på CBOT, prispå december-termin

På torsdag kommer som bekant lagerstatistiken per 1 mars i USA. Det brukar vara stor volatilitet när dessa siffror kommer.

Maltkorn

Maltkorn (november 2013) har fortsatt att utveckla sig starkare än kvarnvetet. Prisskillnaden mellan maltkorn och kvarnvete har vidgats nu i mars. Om man kan, kan det vara en god idé att försöka prissäkra maltkorn i maltkornskontraktet, snare än kvarnvetekontraktet, även om maltkornskontraktet är betydligt mer illikvitt. Man kan lägga limiterade säljordrar.

Prisutveckling på maltkorn, mars 2012 till mars 2013

Majs

Majspriset (december 2013) har liksom vetet brutit den fallande trendlinjen. Detta signalerar att prisfallet är över. Liksom för vetet tycker jag däremot inte att man ska ge sig in och köpa majs. Det finns alldeles för mycket osäkerhet i väder, med mera.

Prisfall på majs ebbar ut

Vi har samma tolkning av marknaden som förra veckan. Prisfallet har troligtvis ebbat ut och priset bör röra sig ”sidledes”. Lagerstatistiken på torsdag kan ändra det.

Sojabönor

Sojabönorna (november 2013) testar ideligen stödet på 1250 cent / bushel.

Sojabönor testar stöd

Gammal amerikansk skörd tycks vara mer eller mindre slut. Export inspections halverades i veckan som gick. Takten på exporten och på inhemsk efterfrågan från ”crushers” har legat på en ohållbart hög nivå. Det var därför egentligen en tidsfråga innan exporten – och ”crushen” skulle ta minska. Bönorna håller helt enkelt på att ta slut.

I diagrammet nedan ser vi export inspections för olika kalenderår. Vit kurva är 2013 och orange kurva är 2012. Slutet av 2012 års kurva är 2012/13 års skörd och vit kurva är förstås det också. Vi ser att exporten kom igång förhållandevis tidigt i höstas och att exporten nu tagit slut rekordtidigt.

Soybeans - Export inspections

Skörden i Brasilien ligger lite efter det normala. I början av mars hade 60% skördats. I Mato Grosso är ca 80% klart, men i Santa Catarina och Rio Grande do Sul nere i södra delen av landet är bara 12% klart, enligt CEPEA.

Eftersom det regnar så mycket kring Mato Grosso har man stora problem med vägarna. Det är svårt att få ut produkten till hamnarna. Detta förklarar till viss del att USA fått exportera så mycket och hållit priset uppe på CBOT.

Marknadsläget är oförändrat från förra veckan: I veckan som kommer får man hålla koll på om priset håller sig över det tekniska stödet vid 1254 eller om det bryts. Om det bryts vill vi vara korta sojabönor.

Raps

Rapspriset (november 2013) som i torsdags för en dryg vecka sedan föll rakt ner till stödet på 415 euro, tvärvände och gick rakt upp förra veckan. Nu ligger priset återigen i den övre delen av det prisintervall mellan 415 och 437 euro som priset har legat inom sedan december.

Teknisk prognos på rapspris

Gris

Grispriset (Maj 13) tycks ha stabiliserat sig efter det stora prisfallet som varit. Frågan är om detta kan utveckla sig till en botten, som priset kan finna ny styrka från.

Grispriset (Maj 13) tycks ha stabiliserat sig

Mjölk

Tisdagens Fonterra-auktion var visade återigen kraftigt högre priser på SMP. Auktionen åtföljdes i pressen av nyhetsartiklar om den svåra torkan i Nya Zeeland och Kinas växande import av mjölkpulver.

I kursdiagrammet nedan ser vi fyra kurvor, som förra veckan. Överst har vi smör i euro per ton, alla är i euro per ton. Den tunna linjen USDA:s notering för SMP i västra Europa. Den feta röda linjen är terminspriset på SMP på Eurex, som avser snittpriset på SMP i Tyskland, Holland och Frankrike. Den gröna linjen är Fonterras auktionspris på SMP.

Prisutveckling på fyra olika mjölkprodukter

Fonterra-priserna har stigit kraftigt i två månader nu och det har fått priserna på Eurex att reagera. Förra veckan var egentligen första gången som Eurex / den europeiska marknaden tog notis om vad som händer på Fonterra-auktionerna. USDA:s index för helmjölkspulver FOB Västeuropa steg också i förra veckans notering.

När det gäller torkan i Nya Zeeland så har det varit torrt framförallt på den norra ön i februari. Mars har lite mindre nederbörd än normalt. I skrivande stund regnar det på den södra ön.

När det gäller Kinas import, ser vi månadsvis statistik nedan. Den senaste noteringen är från februari, som var en månad med mycket ledighet och därmed lägre importaktivitet. I den nedre delen av diagrammet finns en kurva som visar årsvis förändring. Februaris import låg alltså 17% lägre än den gjorde i februari förra året. Sant är att importen från juni och fram till februari visade en stark ökningstakt, uppemot 100% högre än året innan. Men som vi ser har suget avtagit sedan i somras / höstas.

Fonterra-auktionen

Prisuppgången på Fonterra-auktionen är lite kraftigare än de ”spikar” vi har sett tidigare. Den börjar få effekt på andra prisindikatorer och på marknadspriset på Eurex. Vi har haft en säljrekommendation och tror alltjämt att priset är ”högt”. Den stora importökningen i Kina ligger i historien. I årstakt är faktiskt importen lägre än den var förra året. Kortsiktigt kan den påfallande kraftiga styrkan i Fonterra-priserna sprida sig till andra marknader, så man kanske ska avvakta någon vecka eller två med att sälja terminer. Långsiktigt har vi säljrekommendation på terminerna, men kortsiktigt neutral.

[box]SEB Veckobrev Jordbruksprodukter är producerat av SEB Merchant Banking och publiceras i samarbete och med tillstånd på Råvarumarknaden.se[/box]

Disclaimer

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska Enskilda Banken AB (publ) (“SEB”).

Opinions contained in this report represent the bank’s present opinion only and are subject to change without notice. All information contained in this report has been compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents and the information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of this document is urged to base his or her investment decisions upon such investigations as he or she deems necessary. This document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent permitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this document or its contents.

About SEB

SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and other European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets) for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange, Deutsche Börse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden; it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designated investment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEB conducts operations. SEB Merchant Banking. All rights reserved.

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Analys

How renewable fuels are accelerating the decarbonisation of transport

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WisdomTree

On 16 November 2022, UK’s Royal Air Force (RAF) Voyager aircraft, the military variant of the Airbus A330, took to the skies for 90 minutes over Oxfordshire. What looked like a routine test flight in its outward appearance was ultimately deemed ground-breaking. Why? It was a world-first military transporter aircraft flight, and the first of any aircraft type in the UK to be completed using 100% sustainable jet fuel.  

Mobeen Tahir, Director, Macroeconomic Research & Tactical Solutions, WisdomTree
Mobeen Tahir, Director, Macroeconomic Research & Tactical Solutions, WisdomTree

What are renewable fuels?

Renewable hydrocarbon biofuels (also called green or drop-in biofuels) are fuels produced from biomass sources through a variety of biological, thermal, and chemical processes. These products are chemically identical to petroleum gasoline, diesel, or jet fuel.

In other words, renewable fuels are sources of energy chemically identical to fossil fuels but produced from domestic, commercial, or agricultural waste (see Figure 1 below).

Figure 1: Converting waste into energy

Waste types and refinery output

Why the excitement?

Renewable fuels, like renewable diesel and sustainable jet fuel, can reduce greenhouse gas emissions by around 80-90% compared to fossil fuels. And because they burn much cleaner, engine filters remain cleaner for longer reducing the need for maintenance. Furthermore, given used cooking oil, vegetable oil, processing waste, and animal fat waste are used as inputs, the production of these fuels reduces biowaste, thereby cutting emissions from landfills.

This makes renewable fuels a key component of the circular economy. Humans have largely operated on the linear model historically when it comes to utilising natural resources. The circular model, in contrast, is much less wasteful and seeks to recycle as much as possible (see Figure 2 below).

Figure 2: The Circular Economy

Circular economy
Source: WisdomTree, Ellen MacArthur Foundation, 2023

The most exciting thing about renewable fuels is the immediacy with which they can make an impact. The reason why they are referred to as drop-in fuels is that they can replace fossil fuels in internal combustion engines with little or no modification required. So, if supply was abundant enough, forms of transport which cannot be electrified easily like heavy duty trucks, ships, and aeroplanes can be switched across to renewable fuels making a significant improvement to the environmental footprint. According to BP, “A return flight between London and San Francisco has a carbon footprint per economy ticket of nearly 1 tonne of CO2 equivalent. With the aviation industry expected to double to over 8 billion passengers by 2050, it is essential that we act to reduce aviation’s carbon emissions.”

The challenge

Renewable fuels or biofuels are still in their infancy. This means the obvious hurdle to overcome is cost competitiveness with fossil fuels. Cost estimates vary, but figures from the International Air Transport Association (IATA) provide a useful sense for the ballpark. In May 2022, IATA stated that the average worldwide price of jet fuel is about $4.15 per gallon compared to the US average price of a gallon of sustainable aviation fuel, which is about $8.67.

So, roughly double the price of the incumbent polluting technology. This is not a bad starting point at all. Considering how rapidly the cost of energy storage in batteries has fallen in the last decade, renewable fuels could become competitive quite soon if sufficient investment is made and economies of scale are achieved. IATA also predicts that renewable fuels could make up 2% of all aviation fuels by 2025, which could become a tipping point in their competitiveness.

Businesses are acting

Businesses pursuing their own net zero targets have already started exploring renewable fuels to minimise their waste. Darling Ingredients Inc, which produces its trademark Diamond Green Diesel from recycled animal fats, inedible corn oil, and used cooking oil, was chosen by fast food chain Chick-fil-A in March 2022 to turn its used cooking oil into clean transportation fuel.

Similarly, McDonald’s entered into a partnership with Neste Corporation in 2020 to convert its used vegetable oil into renewable diesel and fuel the trucks that make deliveries to its restaurants. According to TortoiseEcofin, both Darling Ingredients and Neste have a net negative carbon footprint given emissions produced by these businesses are lower that the emissions avoided because of their renewable fuels.

A final word

Renewable fuels alone will not tackle climate change. No single solution can. But they can help us make meaningful progress. The Intergovernmental Panel on Climate Change (IPCC) emphasises how crucial it is for the world to halve its greenhouse gas emissions this decade to at least have a chance of limiting global warming to 1.5oC. This means that solutions with an immediate effect have an important role to play. Biofuels can cut emissions from waste in landfills and provide much cleaner alternatives to fossil fuels to help accelerate the world’s decarbonisation efforts. They don’t require different engines to be of use. They just need funding to reach scale.

Mobeen Tahir, Director, Macroeconomic Research & Tactical Solutions, WisdomTree

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Analys

SEB Metals Weekly: China Covid exit is bullish for metals

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China Covid exit is bullish for metals

Softer inflation, slight macro-optimism, and China taking a rapid exit from Covid restrictions. Markets have become more optimistic. Inflation indices have eased and that has created some hopes that central banks won’t lift interest to a level that will kill the economy in 2023. Natural gas prices in Europe have fallen sharply. This has suddenly reduced energy-inflationary pressure and removed the direst downside economic risks for the region. But general market optimism is far from super-strong yet. The S&P 500 index has only gained 1.9% since our previous forecast on 1 Nov 2021, and oil prices are down nearly 10% in a reflection of concerns for global growth. China has however removed all Covid-restrictions almost overnight. It is now set to move out of its three years of Covid-19 isolation and lockdowns at record speed. Industrial metals are up 20% and the Hong Kong equity index is up 40% as a result (since 1 Nov-22). China’s sudden and rapid Covid-19 exit is plain and simply bullish for the Chinese economy to the point that mobility indices are already rebounding quickly. SEB’s general view is that inflation impulses will fade quickly. No need then for central banks across the world to kill the global economy with further extreme rate hikes. These developments have removed much of the downside price risks for metals in 2023 and we have to a large degree shifted our 2024 forecast to 2023.

Lower transparency, more geopolitics, more borders, and higher prices and exponential spikes. The first decade of this century was about emerging markets, the BRICs, the commodity price boom, the commodity investment boom, and free markets with free flow of commodities and labor with China and Russia hand in hand with western countries walking towards the future. High capex spending in the first decade led to plentiful supply and low prices for commodities from 2011 to 2020. A world of plenty, friends everywhere, free flow of everything, and no need to worry. The coming decade will likely be very different. Supply growth will struggle due to mediocre capex spending over the past 10 years. Prices will on average be significantly higher. There will be frequent exponential price spikes whenever demand hits supply barriers. Price transparency will be significantly reduced due to borders, taxes, sanctions, geopolitical alignments, and carbon intensities. Prices will be much less homogenous. Aluminium will no longer be just one price and one quality. Who made it, where was it made, where will it be consumed and what the carbon content will create a range of prices. Same for most other metals.

Copper: Struggling supply and China revival propel copper prices higher. Unrest in Peru is creating significant supply risks for copper as the country accounts for 10% of the global supply. Chile accounts for 27% of global production. Production there is disappointing with Codelco, the Chilean state-owned copper mining company, struggling to hit production targets. The Cobre Panama mine in Panama is at risk of being closed over a tax dispute between Quantum and the government. Cobre Panama is one of the biggest new mines globally over the past 10 years. The rapid exit from Covid restrictions in China is bullish for the Chinese economy and thus for copper demand and it has helped to propel prices higher along with the mentioned supply issues. The Chinese property market will continue to struggle, and it normally accounts for 20% of global copper demand while China accounted for 55% of global copper demand in 2021. While China is no longer prioritizing the housing market it is full speed ahead for solar, wind, EVs, and electrification in general. So, weakening Chinese copper demand from housing will likely be replaced by the new prioritized growth sectors. Global supply growth is likely going to be muted in the decade to come while demand growth will be somewhere between a normal 3% pa. to a strong 4% pa. to a very strong 5% pa. Copper prices will be high, and demand will hit the supply barrier repeatedly with exponential spikes as the world is working hard to accelerate the energy transition. Copper prices could easily spike to USD 15-16,000/ton nearest years.

Nickel: Tight high-quality nickel market but a surplus for a low-quality nickel. Nickel production is growing aggressively in Indonesia. The country is projected to account for 60-70% of global supply in 2030. This will become a huge and extremely concentrated geopolitical risk for the world’s consumers of nickel. Indonesia has an abundance of low-grade C2 nickel. The challenge is to convert low-quality C2 nickel to high-quality C1. We are set for a surplus of C2 nickel but the market for C1 nickel will depend strongly on the conversion capacity for C2 to C1. Low price transparency will also help to send prices flying between USD 20,000/ton and USD 30,000/ton. Strong growth in nickel production in Indonesia should initially call for prices down to USD 20,000/ton. But Indonesia is a price setter. It will account for 50% of global supply in 2023. It doesn’t make sense for Indonesia to kill the nickel price. If the nickel price drops, then Indonesia could quickly regulate supply. There should be a premium to nickel due to this. As a result, we expect the nickel price to average USD 24,000/ton in 2023. C2 to C1 conversion capacity may be strained and there should also be a monopoly premium due to the size of Indonesia. Converting C2 to C1 is however extremely carbon intensive and that could be an increasing issue in the years to come.

Zinc: Super-tight global market. European LME inventories are ZERO and zinc smelters there are still closed. European zinc smelters account for 16% of global zinc smelter capacity. Most of this was closed over the past year due to extremely high energy prices. European LME zinc stockpiles are now down to a stunning zero! The global zinc market is extremely tight. Reopening of European zinc smelting seems unlikely in H1-23 with a continued super-tight market as a result both in Europe and globally.

Aluminium: Price likely to be in the range of USD 2400 – 3200/ton and line with coal prices in China. Aluminium prices have historically been tightly tied to the price of coal. But coal prices have been all over the place since the start of 2021 with huge price differences between Amsterdam, Australia, and domestic Chinese coal prices which are now largely state-controlled. China banning imports of Australian coal, the Chinese energy crisis in 2021, and Russia’s invasion of Ukraine in 2022 are ingredients here. This sent aluminium prices flying high and low. Coal prices in China today imply a price of aluminium between USD 2400/ton and 3150/ton with the LME 3mth aluminium price nicely in between at USD 2590/ton. The global coal market should now become more orderly as China now again is accepting Australian coal. Energy costs have fallen sharply in Europe and some producers in the Netherlands have talked about possible restarts of production. China is likely to reduce its exports of primary aluminium. Energy security of supply is high on the agenda in China, and it makes no sense to emit lots of CO2 in China and indirectly export energy in the form of primary aluminium. Growth in non-China aluminium demand in the years to come will have to be covered by non-China producers which have the potential to force prices higher and away from coal as the price driver. While LME has one price for the 3mth aluminium price we’ll likely get larger and larger price differences across the world in the form of possibly extreme price premiums for example in the EU and the US.

SEB Commodities price outlook
Source: SEB Markets – Commodities. Historical data: Bloomberg 
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Analys

Solid demand growth and strained supply to push Brent above USD 100/b

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SEB - Prognoser på råvaror - Commodity

Brent crude had a strong end of the year as it traded at the highest level since 1 December. It is a slow start to the new year due to bank holidays and Dated Brent trades close to USD 85/b. It averaged USD 99.9/b in 2022. We expect it to average more than USD 100/b on average for the coming year amid strained supply and rebounding demand. Chinese oil demand is set to recover strongly along with re-openings while non-OECD will continue to move higher. At the moment oil looks absurdly cheap as it is cheaper than natural gas in both EU and Japan and also cheaper than coal in Australia.

Some price strength at the end of the year. The Dated Brent crude oil price index gained 2.3% on Friday with a close at USD 84.97/b. It was the highest close since 1 December. This morning it is trading slightly lower at USD 84.8/b but the market is basically void of action due to bank holidays.

Bjarne Schieldrop, Chief analyst commodities at SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

Gloom and doom but IEA, OPEC and US EIA project global crude oil demand to rise between 1 m b/d and 2.2 m b/d YoY in 2023. They also expect call-on-OPEC to rise between 0.3 m b/d and 1.0 m b/d. The US EIA projects demand to increase 1 m b/d in 2023 on the back of a growth of 1.3 m b/d in non-OECD where demand in India rises by 0.2 m b/d and China by 0.6 m b/d. In China this is of course to a large degree due to re-opening after Covid-19 lock-downs. But it is still a good reminder of the low base of oil demand in non-OECD versus OECD. India last year consumed 5 m b/d which only amounts to 1.3 b/capita/year versus a world average of 4.5  b/capita/year and European demand of 10 b/capita/year. Even China is still below the world average as its demand in 2022 stood at 15.2 m b/d or 4.0 b/capita/yr. Non-OECD oil demand thus still has a long way to go in terms of oil demand and that is probably one of the things we’ll be reminded of in 2023 as Covid-19 lock-downs disappear entirely.

Solid demand growth in the face of strained supply. Important to remember is that the world has lost a huge amount of fossil supply from Russia due to the war in Ukraine. First in terms of natural gas where supply to the EU and thus to the world has declined by some 2.5 m boe/d versus pre-war levels. Secondly in terms of crude and products. The latter is of course a constant guessing game in terms of how much Russian crude and product exports has declined. The US EIA however projects that crude oil production in the Former Soviet Union will be down 2 m b/d in 2023 versus pre-Covid levels and down 1.3 m b/d YoY from 2022 to 2023. We are thus talking up to 4.5 m boe/d of lost supply from Russia/FSU. That is a huge loss. It is the reason why coal prices are still trading at USD 200 – 400/ton versus normal USD 85/ton as coal is an alternative to very expensive natural gas.

Overall for 2023 we are looking at a market where we’ll have huge losses in supply of fossil energy supply from Russia while demand for oil is set to rebound solidly (+1.0 – 2.2 m b/d) along with steady demand growth in non-OECD plus a jump in demand from China due to Covid-19 reopening. Need for oil from OPEC is set to rise by up to 1.0 m b/d YoY while the group’s spare capacity is close to exhausted.

We expect Brent crude to average more than USD 100/b in 2023. Despite all the macro economic gloom and doom due to inflation and rising interest rates we cannot help having a positive view for crude oil prices for the year to come due to the above reasons. The Dated Brent crude oil price index averaged USD 99.9/b in 2022. We think Brent crude will average more than USD 100/b in 2023. Oil is today absurdly cheap at USD 85/b. It is cheaper than both coal in Australia and natural gas both in Japan and the EU. This is something you hardly ever see. The energy market will work hard to consume more what is cheap (oil) and less of what is expensive (nat gas and coal).

Latest forecasts by IEA, OPEC and US EIA for oil demand growth and call-on-OPEC YoY for 2023. Solid demand growth and rising need for oil from OPEC. 

Latest forecasts by IEA, OPEC and US EIA for oil demand growth and call-on-OPEC YoY for 2023.
Source: IEA, EIA, OPEC, SEB graph

Oil demand projections from the main agencies and estimated call-on-OPEC. More demand and higher need for oil from OPEC

Oil demand projections
Source: IEA, EIA, OPEC, SEB table

EIA STEO projected change in oil demand for different countries and regions YoY to 2023

EIA STEO projected change in oil demand for different countries and regions YoY to 2023
Source: US EIA, SEB graph

US EIA Dec STEO forecast for FSU oil production. Solid decline projected for 2023.

US EIA Dec STEO forecast for FSU oil production. Solid decline projected for 2023.
Source: US EIA data and projection. SEB graph

US commercial crude and product stocks still below normal

US commercial crude and product stocks still below normal
Source: US EIA, SEB graph

Total US crude and product stocks including SPR. Declining, declining, declining.

Total US crude and product stocks including SPR. Declining, declining, declining.
Source: US EIA, SEB graph

US crude and product inventories both excluding and including Strategic Petroleum Reserves

US crude and product inventories both excluding and including Strategic Petroleum Reserves

US oil sales from US SPR is now coming to an end. Will make the market feel much tighter as it really is.

US oil sales from US SPR is now coming to an end. Will make the market feel much tighter as it really is.
Source: US EIA, SEB graph

Brent crude oil is absurdly cheap as it today trades below both Australian coal and natural gas in both Japan and the EU. Coal and natural gas prices should trade lower while oil should trade higher.

Source: Blbrg data, SEB graph

EU diesel prices versus natural gas prices. Could start to move towards a more natural price-balance in terms of substitution.

EU diesel prices versus natural gas prices. Could start to move towards a more natural price-balance in terms of substitution.
Source: Blbrg data, SEB graph and calculations
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