oil market monthly december 2011

22/12/2011

Commodities [email protected]

Chart 1: Brent Crude and WTI Crude 1st Month Futures (USD/bbl)

Source: Bloomberg

Table 1: Crude oil & product prices Date: 21/12/2011

Crude Oil futures ($/bbl) 1M chg 1M % chg YTD chg YTD % chg

ICE Brent 1M 107.71 0.83 0.8% 12.96 13.7%

WTI 1M 98.67 1.75 1.8% 7.29 8.0%

Swaps front month ($/t) 1M chg 1M % chg YTD chg YTD % chg

3.5% Fuel Oil1 612 11 1.8% 127 26.3%

1% Fuel Oil2 646 20 3.1% 157 32.2%

ICE Gasoil 909 -35 -3.7% 143 18.6%

Jet Fuel3 986 -32 -3.1% 153 18.4%

Notes: 1) FOB Barges ARA, 2) FOB Cargoes NWE, 3) CIF Cargoes NWE

Source: Bloomberg

Chart 2: European Oil Product Cracks (USD/bbl)

Notes: Front month swaps vs. ICE Brent

Source: Bloomberg

Commodities Research - Analysts

Thina M. Saltvedt , Senior Analyst Macro/Oil +47 2248 7993

[email protected]

Bjørnar Tonhaugen , Senior Analyst +47 2248 7959

[email protected]

Oil Market Monthly DecemberDon’t despair if there’s no snow this Christmas, if there is noicy waters to test your skates or your skis remain unwaxed inthe booth – you won’t be bored because there’ll be a lot ofexciting news from the oil market!

Better save on electricity, oil could prove expensive if thepolitical uncertainties in key oil-producing countries continueto escalate. Kazakhstan is new on the list of politicallyturbulent oil producers. In addition, there are growinguncertainties over Iran’s nuclear weapons programme andthe EU’s potential oil embargo, the stability in Iraq after theUS forces are withdrawn, disputes between South and NorthSudan over transit fees which could delay oil deliveries,persistent attacks on the Marib oil pipeline in Yemen andcontinuing violence in Syria.

In addition, the usual noise from less liquidity in theChristmas week, closing of positions before the year-end,tax-related destocking as well as re-indexation of commodityindices in January can cause some short-term turbulenceand choppy trading. For the last decade the average tradingvolume during the Christmas week has been 57% of theaverage trading volume for the rest of the year.

We would not be surprised if also this Christmas holiday willbe riddled with breaking news events than can cause erraticmovements in oil prices in the last trading week of the year.The average Brent oil price so far for Q4 is USD 109.1/barrel,

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All eyes still on European financial crisisMacroeconomic figures from the US, the world’s biggest oilconsumer, have surprised on the upside lately. This gavethe oil market a breathing space before the next battlebegan on Tuesday this week. As feared, the House ofRepresentatives rejected the Senate bill that would extend,for two months, the payroll tax cuts and Federal long-termunemployment benefits. House Republicans called on theSenate to negotiate a bill that would extend these benefitsfor a full year. If Congress fails to agree on extending thepayroll tax cut and the emergency unemployment benefitspast this month, it could trim US GDP by close to 1% as theeconomy already struggles to recover and cope with thefinancial crisis in Europe. A 1% contraction in the USeconomy will cause a significant drop in oil demand by theworld’s biggest oil consumer. This will clearly have anegative effect on oil prices at the onset of next year.Failure by the US Congress to pass a deal before NewYear’s Day would likely prompt renewed risk-off trades,supporting US Treasuries and core European governmentbonds as well as the US dollar, but weaken oil prices, atleast in the near term.

December weather looks to be warmer than normal in theUS and Europe, but colder in Japan. The net effect on oildemand for the OECD regions is estimated to be a fall by185k according to PIRA. Booming shale gas production inthe US and weaker economic conditions are expected tosend natural gas prices in the US further

Oil Market Monthly 1 of 16

22/12/2011

Chart 3: US natural gas prices decoupled from WTI crude oil prices

Source: Reuters EcoWin

Chart 4: US heating oil demand to remain lacklustre

Source: Bloomberg

Chart 5: China Diesel apparent demand rose strongly in November

Source: Bloomberg

down when we move into 2012 (Chart 3). Low natural gasprices in the US relative to oil prices are expected to add tothe bearish outlook for heating oil demand this winter (Chart4).

All eyes are still on the financial crisis in Europe as it hasbeen a big risk that banks would tighten credit supply tohouseholds and businesses – which in turn would create arisk of an even deeper recession and a bigger fall in oildemand. With Wednesday’s lending operation, the ECB hasdelivered an effective remedy against such a scenario –something which is probably far more important than therate cut of 25 bp made earlier this month. This should in ouropinion be a significant contribution to avert a deeper crisisis Europe and give a boost to the oil demand outlook andthe appetite for riskier assets such as oil, at least in theshort term.

Economic growth in China has slowed throughout the yearand recent indicators point to even weaker growth goingforward. Softer economic growth reduced oil demandgrowth to a meagre 0.7% in October according to the IEA.To avoid a sharp setback in economic growth, China hasintroduced smaller monetary policy easing steps andlowered the reserve requirement for banks. The reserverequirement cut supports our view that the authorities will dowhat is necessary to avoid a hard landing of the economyand ensure growth above 8% as we have in our forecast.Thus, more reserve requirement cuts and other fine-tuningmeasures are likely underway. This should support furthergrowth in oil demand in 2012, but at a lower rate seen in2011. Early indications of oil demand for November point toan upswing compared to the month before when dieseldemand seems to have been an important driver, up 5.4%m/m (Chart 5).

According to our oil demand forecast for 2012 we expect aseasonal and cyclical slowdown in oil demand growth in H12012 (Chart 6). For Q1 and Q2 we expect a call on OPEC(how much the oil market expects OPEC to produce tobalance the market) at 29.6m b/d and 29.1m b/d,respectively. If OPEC keeps production strictly to its newproduction level at 30m b/d, we expect to see a stock buildin the first half of 2012 (Chart 7). An increase in oil stockswould help the current situation after Libyan productioncuts, supply disruptions in other oil-producing areas andrising demand in emerging economies have led to asignificant fall in OECD crude oil stocks this summer. AtWednesday’s meeting the cartel members expressed thatthey were happy with an oil price above USD 100/barrel.Therefore Saudi Arabia may also choose to reduceproduction to support prices in H1, which in turn will lead toa build in OPEC spare capacity. We expect a fall in oilprices to USD 107/barrel for Q1 and to USD 105/barrel forQ2. There is a risk that oil prices may fall below these levelsdepending on developments in the Euro-area debt situationand economic growth in large oil-consuming countries suchas the US and China.

In the second half of the year we expect to see an upswing

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22/12/2011

Chart 6: Nordea oil demand growth forecasts (baseline)

Source: IEA, Nordea Markets

Chart 7: OPEC's new production ceiling relative to expected 2012 "call"

Source: IEA, Nordea Markets

Chart 8: Oil prices* have been strongly influenced by geopolitical events

*Brent crude front month futures price

Source: Reuters EcoWin

in oil demand, and the call on OPEC is expected to reach30.7m b/d in Q3 and 30.8m b/d in Q4. The call on OPECwill then rise above the cartel’s current production level. Ifwe are right and OPEC keeps production strictly to its newlevel, we will see a tightening of the supply/demand balancewhich in turn will lead to an increase in oil prices. We expectoil prices to rebound to USD 110/barrel in Q3 and USD112/barrel in Q4. OPEC does not mention a scenario with afaster-than-expected tightening of the supply/demandbalance which in turn may boost oil prices. High oil priceswill clearly put pressure on the world economy. And with therisk of the world economy falling into a maelstrom, OPECrisks prolonging the period of economic contraction andthereby the demand for oil and oil products. If oil pricesmove too high, we must hope for Saudi Arabia to “cheat”and push total production above 30m b/d like the countrydid in June 2008 when oil prices almost reached USD150/barrel.

We expect OPEC’s new production level will lead to aweakening of the supply/demand balance in H1 2012,leading to a weaker oil price outlook in this period. Incontrast, if OPEC decides to keep the production levelunchanged at the meeting on 14 June, we expect to see atightening of the market balance in H2 which in turn shouldtrigger an upswing in oil prices in the second half ofnext year.

Increasing risk of supply outagesWe have not made any changes to our supply-sideprojection since the oil price update from 1 December.Although we would like to underline the increasing risk ofsupply-side outages in the vital oil-producing countriesmentioned below and the upward pressure on prices aproduction disturbance or even the fear of a disturbancemay cause (Chart 8).

As Libyan oil production is gradually returning to the market,a new source of uncertainty has emerged. Kazakhstan, thesecond-largest oil producer among the former Sovietrepublics after Russia and controlling the second-largest oilreserves in the region, has been hit by a wave of unrest.With the production halt in Libya fresh in mind, a series ofdeadly clashes between police and oil workers has raisedconcern over diminishing production/exports in the centralAsian nation.

The turbulence has been building since last summer whenKazMunaigas, the national oil company, sacked hundredsof striking oil workers. If the turbulence continues toescalate, the oil companies may consider evacuating oilworkers as the security may be threatened, which in turnmay lead to productions stoppages and a cut in crudeexports to the key European and Chinese markets. Kazakhoil and gas production is expected to climb significantly overthe next decade and the country is aiming to become one ofthe world’s top oil exporters (EIA). Last year Kazakhstanproduced around 1.7m b/d, just above the volume Libyaproduced before the uprising started. Around 85% of this oilwas exported mainly via pipelines to Europe and

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22/12/2011

Chart 9: Imports of Iranian crude and percentage of total oil demand

Source: IEA

China. We would not be surprised to see oil prices or therisk premium rising by at least USD 5-10/barrel if theturbulence shuts in oil production in Kazakhstan.

Iran is flexing its muscles againIran is flexing its muscles as EU foreign ministers havestarted talks to broaden existing sanctions against Iran andto impose an oil embargo on the country unless Tehransoon halts its highly provocative nuclear enrichmentprogramme. The fierce discussion about the purpose of theprogramme has been going on for decades, but the talkshave become more hostile recently after the InternationalAtomic Energy Agency (IAEA) released a report thatdetailed extensive evidence that Iran has been developingthe technologies used in producing nuclear bombs.

An EU oil embargo will clearly have an effect on theEuropean/global oil balance (Chart 9), oil prices andincrease the political tension, thereby threatening stability inthe oil-rich region. Increasing risk of production disruptionscan lead to a significant upward pressure on oil prices.

The final decision about an oil embargo has been delayedtill January to give the EU members importing Iranian oiltime to find alternative suppliers, but rumours andspeculations about the outcome will add to the political riskpremium.

Third generation Kim poses no immediate threat to the oil marketThe implication, if any, for the oil market of Kim Jong-euntaking over as the leader of North Korea after his father KimJong-il is still uncertain. Long-term caution will persist aslong as Kim Jong-eun’s new regime is unsettled. There is arisk that the North Korean regime may collapse during thetransition of power and the nuclear arms may fall into thewrong hands. Some have also been speculating that thenew leader may be tempted to show military strength byengaging in provocative acts, another nuclear test or militaryaction. This is a particular fear for South Korea after lastyear when Pyongyang killed several people by torpedoing aSouth Korean warship and bombarding an island.

Both North and South Korea are wholly dependent on oilimports as the countries have no proven domestic oilreserves. While oil accounts for around 6% of total NorthKorean primary energy consumption, petroleum productscover around 45% of the South Korean primary energyconsumption. In 2008, South Korea was the world’s fifth-largest crude oil importer. The Middle East supplies SouthKorea with approximately three-quarters of the country’s oilimports totalling 3.1m b/d. South Korea is home to three ofthe ten largest oil refineries in the world with significantexports to China, Singapore and Indonesia. Clearly anescalation of the conflict between the two countries on theKorean peninsula may cause delays to the shipment ofcrude oil and oil products in the area, thus affecting the priceof oil and oil products.


22/12/2011

Chart 10: Stable long term prices, softening short term prices

Source: Bloomberg

Chart 11: OECD total oil inventories have continued to fall sharply

Source: IEA

Chart 12: Light prod. weakness, middle/heavy prod. strength to reverse

Source: Bloomberg

Crude price and forward curve outlookBrent front month futures prices averaged USD110.50/barrel in November and have thus far in Q4averaged USD 109.20/barrel, just shy of our price forecastof USD 110/barrel. Front month prices have most recentlytrended below this average, while long-dated oil prices, eg5-year deferred Brent futures, have remained more stablearound the USD 90/barrel mark. The spread betweenprompt and deferred prices has therefore eased since ourlast report, with the 1M-5Y time spread now around USD15/barrel from the recent high of USD 21/barrel in lateNovember (Chart 10). The easing of the so-called“backwardation” in the Brent forward curve corresponds wellwith the weakening of the supply-demand balance in recentweeks. According to preliminary inventory data from the IEAfor November, total OECD commercial oil stocks builtcounter-seasonally by 7m barrels versus the 5-year averagedraw of 15m barrels (Chart 11). The stock build wasconcentrated in petrol and fuel oil, while OECD crude oilstocks edged down by 0.8m barrels, the sixth consecutivemonthly drop. Oil supply increased strongly in November,taking OPEC crude supply close to our call on OPEC crudefor Q4 of 31m b/d. We expect that the oil inventory trend hasturned with expected stock builds in the next two quarters,even if OPEC reduces production down to its new “ceiling”of 30m b/d (see Chart 7). This will in all likelihood result in aweakening of crude oil time spreads, ie prompt crude priceswill continue to soften relative to long-dated prices.

Product price and crack spreads outlookThe reversal of the trend in product prices and cracksdescribed in our latest Oil Market Monthly November seemsto have started already. Thus far in December, light productcracks (ie petrol) have started to improve from depressedlevels, while middle distillate cracks (ie gasoil/diesel and jetfuel) have continued to soften from October’s strong levels.Heavy fuel oil cracks have remained firm, but also softenedfrom the October highs, as crude runs have been cut due togenerally weak refining margins. We continue to expect thetrend of weak light product cracks and strong middle-heavycracks to continue to reverse over the next few months(Chart 12).

Gasoil/diesel outlookGasoil (diesel and heating oil) demand still continues toshow the most strength among the major oil products. Theseasonal demand increase for heating oil in the West hasbeen slightly weaker than normal due to mostly warmerweather thus far this heating season. Supply has improvedsignificantly since October, when crack spreads for North-West European gasoil contracts peaked at around USD25/barrel. Cracks have recently softened to levels aroundUSD 15/barrel. High-frequency inventory data from the USand Europe show a stabilisation in middle distillate stocksthe past few weeks (see Charts 13, 47 and 48), whichcorresponds with the weaker price trend. In Europe, lowwater levels in the Rhine in November limited distributionresulting in a slight build-up of stocks at independentstorages around Amsterdam-Rotterdam-

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22/12/2011

Chart 13: European gasoil inventories have stabilised

Source: Bloomberg

Chart 14: Singapore middle distillates remain very low

Source: Bloomberg

Chart 15: Fuel oil inventories at ARA continued to stabilise

Source: Bloomberg

Antwerp (ARA). In Asia, middle distillate stocks areparticularly low in Singapore (Chart 14) on the back ofrobust demand, particularly from China which returned as anet diesel importer in October and November, and lowersupply due to large refinery outages earlier this autumn.Barring much colder-than-normal weather or sharp runs cutsdue to limited crude oil supply, we expect middle distillatecracks to have passed their peak but to remain firm. Goinginto 2012, the weakening of cracks will be mostly driven byhigher crude availability/runs coupled with a recovery ofRussian exports, where middle distillate exports shouldincrease after completion of the government-directed stockbuilds. We expect distillate stocks to build again going intoH1 2012. The recurring power shortages in China entailupside risk to diesel demand, but a slowing global economyprovides a counterbalance. Crude oil prices willnevertheless remain the main driver of the trend in productprice levels, as refinery capacity is ample.

Fuel oil outlookHeavy fuel oil prices relative to crude oil prices haveremained firm since our November report, after weakeninginitially. The 3.5% Rotterdam front month crack spread toDated Brent remains around negative USD 10/barrel, as fueloil supply has remained muted still. Weak refinery marginsamid tight crude supply have prompted runs cuts, whichreduced straight-run fuel oil production. Meanwhile,sophisticated refineries have maximised the use of theirconversion capacity which additionally reduced fuel oilproduction. High-frequency inventory data in Europe show acontinued stabilisation in fuel oil stocks from the officialOctober OECD inventory statistics released by the IEA inmid-December (Chart 15). Fuel oil demand will besupported by power generation needs, especially in Japandue to the nuclear outages, but bunkers demand growth willslow in the near term together with the global economy.Higher crude availability/runs over the coming months willnaturally increase fuel oil supply and weaken fuel oilbalances. We expect fuel cracks relative to Brent to softenfurther from current strong levels, but do not foresee anycollapse in fuel oil prices relative to crude oil as in 2008.

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Table 2: Crude oil and oil products futures Date: 21/12/2011 Nordea Forecast

Crude Oil and Products Futures Unit Exchange Front month M/M chg Dec-12 M/M chg 2011E 2012E

Brent Crude Oil USD/bbl ICE 107.71 1.0% 104.08 0.3% 110 109

WTI Crude Oil USD/bbl NYMEX 98.67 1.7% 97.67 1.8%

ICE Gasoil USD/t ICE 907.50 -2.9% 893.75 -2.6%

Heating Oil No.2 USd/gal. NYMEX 290.87 -3.2% 289.38 -2.4%

RBOB Gasoline USd/gal. NYMEX 261.99 4.9% 247.57 2.4%

Table 3: Oil product swaps Date: 21/12/2011

OTC Products Swaps Unit Source 1st Month M/M chg 1st Qtr M/M chg 1st Year M/M chg

Fuel Oil 3.5% FOB Barges ARA USD/t Bloomberg 613 1.7% 609 2.2% 595 1.8%

Fuel Oil 1% FOB Cargoes NWE USD/t Bloomberg 648 3.1% 643 3.2% 628 2.1%

0.1% Gasoil CIF Cargoes NWE USD/t Bloomberg 916 -3.9% 912 -3.0% 904 -2.9%

Jet Fuel CIF Cargoes NWE USD/t Bloomberg 986 -3.1% 989 -2.3% 1,011 -1.8%

Sing 380 Fuel Oil USD/t Bloomberg 642 1.6% 634 2.8% 617 2.1%

Table 4: Related Commodities, spot prices Date: 21/12/2011

Commodity Unit Index provider/source Quote type Last M/M chg YTD chg

Gold USD/t. oz. Bloomberg Spot 1,615.23 -3.7% 13.7%

US Natural Gas, Henry Hub USD/MMBtu Bloomberg Spot 3.03 2.7% -28.4%

UK Natural Gas, National Balancing Point GBp/therm Bloomberg Day Ahead 54.60 -9.6% -11.9%

Thermal coal, CIF ARA (API2) USD/t McCloskey Spot weekly 110.09 -4.4% -16.5%

Steel, SBB World Price Tracker USD/t Steel Business Briefing Spot weekly 242.62 -2.4% 1.7%

Iron Ore 62% Fe Fines (CFR Tianjin port) USD/t Steel Business Briefing Spot 134.80 -8.5% -20.8%

Baltic Dry Index index Baltic Exchange Spot 1,856 -1.0% 4.7%

Baltic Dirty Tanker Index index Baltic Exchange Spot 902 14.8% -13.5%

Table 5: Financial Markets Date: 21/12/2011

Index Currency Source Last M/M chg YTD chg

S&P 500 USD Bloomberg 1,243.72 4.3% -1.1%

Euro Stoxx 50 EUR Bloomberg 2,244.35 3.9% -19.6%

Shanghai SE Composite CNY Bloomberg 2,191.15 -9.3% -22.0%

Dollar Index Index Bloomberg 80.02 2.2% 1.3%

Key Market Data


22/12/2011

Chart 16: ICE Brent 1st month (USD/bbl) Chart 17: NYMEX WTI 1st month (USD/bbl)

Source: Bloomberg Source: Bloomberg

Chart 18: ICE Gasoil (USD/t) Chart 19: NYMEX Heating Oil No. 2 (USd/gal.)


Chart 20: NYMEX RBOB Gasoline (USd/gal.)

Source: Bloomberg

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Chart 21: Fuel Oil 3.5% FOB Barges ARA (USD/t) Chart 22: Fuel Oil 1% FOB Cargoes NWE (USD/t)


Chart 23: 0.1% Gasoil CIF Cargoes NWE (USD/t) Chart 24: Ultra Low Sulfur Diesel 10ppm CIF Cargoes NWE (USD/t)


Chart 25: Jet Fuel CIF Cargoes NWE (USD/t) Chart 26: Sing 380 Fuel Oil (USD/t)


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22/12/2011

Chart 27: Fuel Oil 3.5% Crack (USD/bbl) Chart 28: Fuel Oil 1% Crack (USD/bbl)


Chart 29: 0.1% Gasoil Crack (USD/bbl) Chart 30: Ultra Low Sulfur Diesel 10ppm Crack (USD/bbl)


Chart 31: Jet Fuel Crack (USD/bbl) Chart 32: Sing 380 Fuel Oil Crack (USD/bbl)


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Chart 33: ICE Brent (USD/bbl) Chart 34: NYMEX WTI (USD/bbl)


Chart 35: ICE Gasoil (USD/t) Chart 36: NYMEX Heating Oil No. 2 (USd/gal.)



Source: Bloomberg

Forward curves, futures

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22/12/2011

Chart 38: Fuel Oil 3.5% FOB Barges ARA (USD/t) Chart 39: Fuel Oil 1% FOB Cargoes NWE (USD/t)

Source: Bloomberg CFVL Source: Bloomberg CFVL

Chart 40: 0.1% Gasoil CIF Cargoes NWE (USD/t) Chart 41: Ultra Low Sulfur Diesel 10ppm CIF Cargoes NWE (USD/t)


Chart 42: Jet Fuel CIF Cargoes NWE (USD/t) Chart 43: Sing 380 Fuel Oil (USD/t)


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22/12/2011

Chart 44: Total Products inventories (mb) Chart 45: Total Crude Oil inventories (mb)


Chart 46: Total Motor Gasoline inventories (mb) Chart 47: Total ULSD < 15ppm inventories (mb)


Chart 48: Total Heating Oil (HSD > 500 ppm) inventories (mb) Chart 49: Total Residual Fuel Oil (mb)


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390

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


170

180

190

200

210

220

230

240

250

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


0

20

40

60

80

100

120

140

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


2025303540455055606570

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg

30

32

34

36

38

40

42

44

46

48

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg


22/12/2011

Chart 50: Total Refinery Input to Distillation (mb/d) Chart 51: Total Products Demand (mb/d)


Chart 52: Motor Gasoline Demand (mb/d) Chart 53: Distillates Demand (mb/d)


Chart 54: Residual Fuel Oil Demand (mb/d) Chart 55: Jet Fuel Demand (mb/d)


DOE Weekly Demand (US)

17

18

19

20

21

22

23

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


8,0008,2008,4008,6008,8009,0009,2009,4009,6009,800

10,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


2,500

3,000

3,500

4,000

4,500

5,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


11

12

13

14

15

16

17

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52


1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg

0

200

400

600

800

1,000

1,200

1,400

1,600

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52



22/12/2011

Chart 56: Total Domestic Crude Oil Production (mb/d) Chart 57: Total Crude Oil Refinery Runs (mb/d)


Chart 58: Motor Gasoline Production (kb/d) Chart 59: Distillates Production (kb/d)


Chart 60: Net Crude Oil Imports, 4 week moving averages (mb/d) Chart 61: Net Product Imports, 4 week moving averages (mb/d)


DOE Weekly Production & Imports (US)

11

12

13

14

15

16

17

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg

3.5

4.0

4.5

5.0

5.5

6.0

6.5

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg

7,500

8,000

8,500

9,000

9,500

10,000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52Series4 2011 2010 5 year avg

3,000

3,500

4,000

4,500

5,000

5,500

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 525y range 2011 2010 5 year avg

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52



22/12/2011

Chart 62: NYMEX WTI (USD/bbl) Chart 63: NYMEX Heating Oil No. 2 (USd/gal.)



Source: Bloomberg

CFTC Commitments of Traders Report

0%

2%

4%

6%

8%

10%

12%

50

60

70

80

90

100

110

120

14Dec10 14Mar11 14Jun11 14Sep11WTI 1M Man. Money Net Pos. of OI (rhs)

Managed Money is a category of traders defined by the Commodity Futures Trading Commission (CFTC) as either a registered commodity trading advisor (CTA), a registered commodity pool operator (CPO) or an unregistered fund (hedge fund). These traders are engaged in managing and conducting organized futures trading on behalf of clients.

Net positions measures the accumulated positioning for a given point in time for all traders in a CFTC category. Managed Money net positions gauges the sentiment for future price direction among the "speculative" or "financial" traders in the futures markets.

Large net positions of Managed Money can be interpreted as a contrarian risk signal: A turn in the sentiment could create a large amount of position squaring from these traders. Net long positions would require selling and thus downward pressure on prices. Net short positions would require buying and thus upward pressure on prices.

0%

2%

4%

6%

8%

10%

12%

14%

100

150

200

250

300

350

14Dec10 14Mar11 14Jun11 14Sep11NYM Heating Oil 1M Man. Money Net Pos. of OI (rhs)

0%

5%

10%

15%

20%

25%

100

150

200

250

300

350

14Dec10 14Mar11 14Jun11 14Sep11RBOB Gasoline 1M Man. Money Net Pos. of OI (rhs)

Nordea Markets is the name of the Markets departments of Nordea Bank Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea Bank Danmark A/S.

'The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.


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