Connect with us

Analys

SEB Jordbruksprodukter, 7 januari 2013

Published

on

SEB - Prognoser på råvaror - CommodityI det senaste veckobrevet som publicerades i mitten av december, hade vi gått över till säljrekommendation på alla jordbruksprodukter. Priserna på i synnerhet vete och majs har fallit kraftigt sedan dess. Ser man till väderläget i USA och crop condition för höstvetet ser man dock inte några motiv till stora prisfall på majs och vete. Läget väger mellan extrema utfall – antingen ännu lägre pris eller högre pris om det blir ytterligare ett år med missväxt samtidigt som global efterfrågan tar ny fart.

Prognos / Tendens - JordbrukspriserEftersom vi huvudsakligen sysslar med terminer på jordbruksprodukter här på SEB, kan det vara av intresse att summera året inte bara i hur mycket spotpriserna rörde sig under året som gått, utan också hur mycket avkastning en position via terminer hade gett.

Så här summerar vi kortfattat förra året

Sojabönor: Spotprisförändring: +11%. Terminsavkastning (om köpt): +18%
Majs: Spotprisförändring +3%. Terminsavkastning (om köpt): +14%
Chicagovete: Spotprisförändring +15%. Terminsavkastning (om köpt): +6%
US Lean Hogs: Spotprisförändring +1%. Terminsavkastning (om köpt): -3%
Socker: Spotprisförändring -23%. Terminsavkastning (om köpt): -20%

Notera att man ”som vanligt” tjänat på att sälja Chicagovetet i förhållande till spotpriset. Ska man prissäkra vete, är det nästan alltid lönsammast att göra det i en valutasäkrad Chicagotermin istället för en valutasäkrad Matif-termin.

På fredag är det dags för årets första WASDE-rapport. Då publicerar också USDA den viktiga lagerstatistiken per den första december 2012.

Vete

Hur kommer vetepriset att utveckla sig fram till hösten i år? Rätt svar på den frågan är värt hundratusentals kronor för en genomsnittlig spannmålsodlare. Läget är genuint osäkert och väger mellan extrema möjligheter, eller hot, om man så vill. Situationen på marknaden mäts i siffror. Vi ska här gå igenom

  1. Crop condition
  2. Spekulanternas position i marknaden (som återspeglar vad den kategorin tror om framtida prisutveckling)
  3. Torkan i USA

Vi ska också titta lite på säsongsmönstret i lantbrukares försäljning av terminer och konsumtion.

Men först en genomgång av prisutvecklingen.

Nedan ser vi november (2013) kontraktet, där priset ligger på 220 euro, en viss stödnivå.

Novemberterminen på vete 2013

Nedan ser vi decemberkontraktet på CBOT. Vi ser att priset fallit tämligen kraftigt sedan mitten av december. Vår säljrekommendation på vete har här alltså fungerat väl för dem som följde rådet. Vi ser också att prisfallet nu bör börja närma sig sitt slut. Det finns ett ganska starkt stöd på 770 cent. Strax under den nivån har det skett mycket handel tidigare och kursfallet kommer antagligen att bromsas upp på den nivån.

December-terminen för vete på CBOT

Nedan ser vi kursdiagrammet för kommande skörd, november 2013. Priset bröt den uppåtgående stödlinjen vid strax över 240 euro per ton som en respons på WASDE-rapporten. Därefter har priset fallit ner till stödlinjen vid 235 euro. Där fanns köpare. Det är möjligt att det kommer en rekyl uppåt i veckan. Vi anser att den rekylen uppåt i så fall är ett säljtillfälle, och rekylen bör maximalt, enligt den tekniska analysen, gå upp mot 240 euro, men troligtvis inte över.

Crop Condition

Endast 33% av det övervintrande höstvetet var i ”good” eller ”excellent condition” den sista rapporteringsdagen i december förra året. Nedan ser vi hur läget har varit vid samma tid föregående år.

Som vi ser är vetet startar vetet i sin sämsta form sedan 2003 (som följdes av vår och sommar, skörd och – prisuppgång år 2004).

Vete i dålig form

Torkan i USA håller i sig. Det är den värsta torkan sedan 30-talets ”dust bowl”. Vi ser att torkan är väst precis där vetedistrikten ligger.

U.S. Drought Monitor - Karta USA

Spekulanterna har tagit fasta på att ”höga priser” stimulerar mer produktion och sålt terminer kraftigt. Den röda linjen i diagrammet nedan visar nettopositionen för kategorin terminshandlare som klassificeras om ”non-commercials” i CFTC:s sammanställning. Den blå kurvan är priset på spotkontraktet på CBOT.

Vete - Pris och nettoposition

Eftersom det ser ut som ”alla” har sålt så kanske en del tycker att det då inte kan finnas någon kvar att sälja. Men ”commercials”, dvs bönder har ännu inte påbörjat sin prissäkringssäsong. Den brukar börja när snön försvinner och man får ett bättre grepp om hur mycket, om något, som finns att prissäkra.

Nedan ser vi genomsnittet under året av ”Commercial Net Short Futures Position” enligt CFTC:s data.

Genomsnitts-positionen är beräknad med veckovis data från och med 2003 till och med 2012. Som ”commercial” klassificeras t ex lantbrukare, kvarnar och spannmålshandlare (lagerhållare). Toppen vi ser i juli-augusti, beror troligen på att spannmålshandlarna / lagerhållarna säljer terminer för att prissäkra den inköpta varans värde. Vi ser att antalet sålda kontrakt säsongsmässigt ökar kraftigt i början av året, när lantbrukarna för allt mer klart för sig hur mycket det finns att prissäkra.

Vete - Genomsnittsposition

De strategier som redovisas i boken ”Bättre betalt för skörden” av Iwarson, 2012, visar att februari har varit den bästa månaden att prissäkra sedan (åtminstone) 1980. Priset på december-terminen på Chicago Board of Trade har i genomsnitt haft sin högsta premie då och gett högst vinst på prissäkringen.

Sammanfattningsvis: I början av december, i det senaste veckobrevet, bytte vi från köprekommendation till säljrekommendation. Prisfallet har nu varit så stort att priset kommer ner mot naturliga stödnivåer.

Samtidigt hopar sig hoten inför våren och sommaren i form av exceptionellt dålig form på höstvetet i USA och ihållande torka och redan mycket låga lager av gammal skörd. Vi förbereder oss därför på att gå över till i första hand en neutral rekommendation, eventuellt om en vecka.

Maltkorn

November 2013-kontraktet har fortsatt att falla i pris för andra veckan. Vi ser i diagrammet nedan att styrkan i marknaden successivt har avtagit sedan slutet av sommaren.

Avtagande styrka i maltkorn

Potatis

Potatispriset för leverans i april har sjunkit något sedan förra veckan och handlas nu under 30 euro per dt. Även i potatismarknaden ser vi att styrkan i uppgången har avtagit de senaste månaderna.

Potatispriset med leverans i april 2014

Majs

Majspriset (mars 2013) har fallit tämligen kraftigt. Euforin över att ”Fiscal cliff” undveks vid årsskiftet blev kortvarig. Produktionen av etanol i USA nådde för första året på länge inte en ny rekordnivå i USA.

Ökningstakten i efterfrågan på etanol har alltså vänts till en minskning. Den här efterfrågepressen uppåt på priset tycks nu av allt att döma vara borta.

Marknaden har tagit fasta på att det höga priset ”borde” stimulera i ökad areal och därmed ökad produktion. Men som vi sett ovan finns det ett stort underskott av markfukt i USA. Det borde ha regnat mer än normalt de senaste månaderna och det måste regna mer än normalt ända fram till maj för att normalisera markfukten. Det har som bekant inte alls regnat så mycket och prognosen framöver visar inga tecken på att det ska göra det. Sådden kommer alltså att ske under torra förhållanden.

Tekniskt stöd finns på 550 cent i decemberkontraktet, som vi ser i diagrammet nedan. Det mesta av prisfallet är alltså troligtvis bakom oss.

Prisfallet på majs verkar ta slut

Sådden i Argentina är till 80% avklarad enligt BAGE. Sådden kommer snart att vara helt avklarad. På fredag publicerar USDA den viktiga lagerstatistiken per den 1 december i USA. Viktigast av den lagerstatistik som publiceras kommer att bli den för majs.

Sojabönor

Till skillnad från spannmålen majs och vete har sojabönorna fallit endast lite sedan december. Sojamjölet föll 7% förra veckan, medan sojaoljan gick upp med 2%. Farm Bill från 2008 förlängdes eftersom den som blandar i biodiesel i dieselbränslet får behålla en dollar i skatterabatt per gallon. Det var inte många som räknat med det.

Prisutveckling på sojabönor

Fokus lämnar nu allt mer den nordamerikanska marknaden och flyttar till den sydamerikanska. Argentinska BAGE (Buenos Aires Grain Exchange) rapporterade förra veckan att sådden i landet var klar till 85%.

Varmare och torrare väder har återkommit till Argentina. Nederbörden i Brasilien har ökat, vilket är gynnsamt. Däremot lider nordöstra Brasilien av den värsta torkan på 50 år, rapporterar media. Vi förstår inte riktigt detta, när våra kontakter på platsen säger att det regnar ordentligt i Natal. I Rio de Janeiro är det översvämningar överallt och det var 45 grader på nyårsafton. Vi tror att oron för väderproblem i Sydamerika är överdriven.

Raps

Rapspriset (november 2013) har en teknisk stödnivå strax under dagens kursnivå. Priset ligger strax över förra årets bottennoteringar. Det rapporteras från Indien att förnyad torka i landet sätter rapsskörden i farozonen.

Priset på raps

Gris

Grispriset (Maj 13), amerikansk Lean Hogs, har haft en fin prisuppgång sedan i somras. Trenden har dock förlorat nästan all sin kraft. De senaste tre månaderna har priset egentligen rört sig ”sidledes”, vilket kan vara slutet på uppgångsfasen. Fallande pris på majs och sojamjöl bör, allt annat lika, leda till högre grisproduktion och därmed lägre priser.

Trend bruten i lean hogs

Mjölk

I diagrammet nedan ser vi tre kurvor. Den tunna röda är priset på klass 3-mjölk i cent per pund på CMEbörsen.

Vi ser att priset sedan mitten av december fallit från 21 cent till 18.03 cent. Den gröna linjen är priset på smör på Eurex börsen. Priset anges i euro per ton, 3388 euro per ton. Den blåa linjen är priset på skummjölkspulver i euro per ton på Eurex-börsen. Priserna på smör och SMP har legat stabilt den senaste månaden.

Prisutveckling på mjölkprodukter

Det börsbaserade priset i svenska kronor beräknas med formeln:

Hur räknar man fram börspriset på mjölk

där
BUT = priset på smör i euro per ton
SMP = priset på skummjölkspulver i euro per ton
FX = växelkursen för EURSEK.

EURSEK

EURSEK har de senaste veckorna återigen försvagats mot kronan. Det finns inte mycket som tyder på att en förstärkning i euron skulle vara förestående, men inte heller några starka tecken på kursfall.

Valutaparet EUR SEK

USDSEK

Dollar stärktes något märkligt av den halvmesyr som undvikandet av ”Fiscal Cliff” innebar. Den politiska uppgörelsen i USA innebär endast att beslutet skjuts upp två månader. Med tiden kommer Fiscal Cliff återigen galopperande. Ironiskt nog innebär uppgörelsen att de federala utgifterna höjdes. Inte sänktes.

Valutaparet USD SEk

[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.

Continue Reading
Click to comment

Leave a Reply

Din e-postadress kommer inte publiceras. Obligatoriska fält är märkta *

Analys

How renewable fuels are accelerating the decarbonisation of transport

Published

on

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

Continue Reading

Analys

SEB Metals Weekly: China Covid exit is bullish for metals

Published

on

SEB - analysbrev på råvaror

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 
Continue Reading

Analys

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

Published

on

SEB - analysbrev på råvaror
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
Continue Reading

Populära