jason schenker oil cash crop presentation nov0504
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Jason SchenkerEnergy Economist704.383.3695jason.schenker@wachovia.com
Oil: Cash Crop of the Middle East
The Global Economy and Oil
The Global Economy and Oil
Growth •All Ships Are Rising (The World is Growing)•World GDP Distribution•World Oil Demand Allocation•High Prices Hurt U.S. Trade Balance
World GDP
World GDP Based on U.S. Dollar Purchasing-Power-Parity
Russia3%Canada
2%
Italy3%
Japan7%
Germany4%
France3%U.K.
3%
U.S.21%
Non-G854%
Global Demand for Crude in 2004
Global Oil Usage in 2004 (IEA)
L.A.6%
Africa & M.E.10%
FSU5%
Other Asia10%
OECD Pacific11%
Europe20%
North America30%
China8%
Real GDP
20042003200220012000
8%
6%
4%
2%
0%
-2%
8%
6%
4%
2%
0%
-2%
"REAL" GDP GROWTHBar - Seasonally Adusted Annual Rate, Line - Yr/Yr % Change
3rd Quarter 2004 @ 3.7%Yr/Yr % Change @ 3.9%
G8 Growth in 2Q 2004
CanadaRussiaU.K. EurozoneJapanU.S.
8%
7%
6%
5%
4%
3%
2%
1%
8%
7%
6%
5%
4%
3%
2%
1%
G8 Real GDP Growth RatesYear-on-Year % Change
2Q 2004
Chinese Growth
0403020100999897
12%
10%
8%
6%
4%
2%
0%
12%
10%
8%
6%
4%
2%
0%
Chinese Real GDP Growth(Year-on-Year Rate)
Import Prices
04030201
160
140
120
100
80
60
40
160
140
120
100
80
60
40
IMPORT PRICES FOR ENERGY PRODUCTSYear to Year Percent Change
September
Petroleum & Petroleum Products, Up 48.7%
Negative Trade Balance
04030201009998979695949392
$0
$-10
$-20
$-30
$-40
$-50
$-60
$0
$-10
$-20
$-30
$-40
$-50
$-60
TRADE BALANCE IN GOODS & SERVICES3 Month Moving Average - In Billions
August @ -$53.2 B
Oil Markets: Supply and Demand
First Look: Crude Prices Since 2000
20042003200220012000
$60
$50
$40
$30
$20
$10
$60
$50
$40
$30
$20
$10
Price of Crude Oil Price per Barrel since January 2000
November 4, 2004
Oil Markets
Oil Price is Driven By•Production of Crude (Supply)•Crude Inventories (Reserve Supply)•Refinery Capacity (Supply of Products)•Product Inventories (Reserve Supply)•Product Prices (Demand for Products)•Crack Spreads (Profitability of Products)
Global IEA Supply
20042003200220012000
84
82
80
78
76
74
72
84
82
80
78
76
74
72
Global Oil Supplyin millions of barrels per day
September @ 84.0
Global IEA Demand Forecast
200520042003
86
84
82
80
78
76
74
86
84
82
80
78
76
74Source: International Energy Agency
Global Demandin millions of barrels per day
Crude Inventories Since 1999
200420032002200120001999
360
340
320
300
280
260
240
360
340
320
300
280
260
240
U.S. Crude Oil InventoriesReported Weekly by the EIA and API
October 29, 2004
American Petroleum InstituteDepartment of Energy
Crude Inventories Since 2003
20042003
310
300
290
280
270
260
310
300
290
280
270
260
U.S. Crude Inventoriesin millions of barrels
October 29, 2004
EIA InventoriesAPI Inventories
Crude Inventories Since 2004
2004
310
300
290
280
270
260
310
300
290
280
270
260
U.S. Crude Oil InventoriesReported Weekly by the EIA and API
October 29, 2004
American Petroleum InstituteDepartment of Energy
Gasoline
Gasoline Inventories
20042003
220
215
210
205
200
195
190
185
220
215
210
205
200
195
190
185
U.S. Gasoline Inventoriesin millions of barrels
October 29, 2004
EIA InventoriesAPI Inventories
Gasoline Prices Since 2000
20042003200220012000
$160
$140
$120
$100
$80
$60
$40
$160
$140
$120
$100
$80
$60
$40
Price of Gasoline Contract Price per 100 Gallons since January 2000
November 4, 2004
Gasoline-Crude Crack Spread
20042003200220012000
$20
$15
$10
$5
$0
$20
$15
$10
$5
$0
Gasoline - Oil Crack SpreadPrices since 2000
November 4, 2004
Crack Spread100-day Moving Avg30-day Moving Avg
Gasoline-Crude Crack Spread since January 2004
NovOctSeptAugJulJunMayAprMarFebJan
$20
$15
$10
$5
$0
$20
$15
$10
$5
$02004
Gasoline-Oil Crack SpreadPrice per Barrel since January 2004
November 4, 2004
Crack Spread100-day Moving Avg30-day Moving Avg
Retail Gasoline Prices
20042003
$2.10
$2.00
$1.90
$1.80
$1.70
$1.60
$1.50
$1.40
$2.10
$2.00
$1.90
$1.80
$1.70
$1.60
$1.50
$1.40
Gasoline PricesU.S. Dept of Energy Automotive Gasoline Total Regular Unleaded Avg. Price
November 1 @ $2.03
Heating Oil
Heating Oil Inventories
20042003200220012000
150
140
130
120
110
100
90
150
140
130
120
110
100
90
U.S. Heating Oil Inventoriesin millions of barrels
October 29, 2004EIA InventoriesAPI Inventories
Heating Oil Prices Since 2000
20042003200220012000
$160
$140
$120
$100
$80
$60
$40
$160
$140
$120
$100
$80
$60
$40
Price of Heating Oil Price per Contract since January 2000
November 4, 2004
Heating Oil-Crude Oil Crack Spread
200420032002
$12
$10
$8
$6
$4
$2
$0
$-2
$12
$10
$8
$6
$4
$2
$0
$-2Shaded Boxes Include Nov.- Feb.
Heating Oil - Crude Crack SpreadPrice per Barrel since January 2002
November 4, 2004
Crack Spread100-day Moving Avg30-day Moving Avg
Heating Oil and Gasoline Crack Spreads
20042003
$20
$15
$10
$5
$0
Gasoline and Heating Oil Crack SpreadsDollars Per Barrel Since 2003
November 4, 2004
Gasoline Crack SpreadHeating Oil Crack Spread
Jet Fuel
Jet Fuel Inventory
040302010099989796959493929190
50
45
40
35
30
50
45
40
35
30
U.S. Jet Fuel Inventoriesin Millions of Barrels
Inventories52-week moving average
Jet Fuel Production
040302010099989796959493929190
1.8
1.6
1.4
1.2
1.0
1.8
1.6
1.4
1.2
1.0
U.S. Daily Jet Fuel Productionin Millions of Barrels
Daily Production52-week moving average
Jet Fuel Prices
0403020100
$180
$160
$140
$120
$100
$80
$60
$40
$180
$160
$140
$120
$100
$80
$60
$40
U.S. Jet Fuel PriceDollars per 100 Gallon Contract (NY)
November 4, 2004
Crude Oil
Crude Prices Since January
NovOctSepAugJulJunMayAprMarFebJan
$60
$55
$50
$45
$40
$35
$30
$25
$60
$55
$50
$45
$40
$35
$30
$252004
Price of Crude Oil Price per Barrel since January 2004
November 4, 2004
WTI Crude Price100-day Moving Avg30-day Moving Avg
Last Look: Crude Prices Since 2000
20042003200220012000
$60
$50
$40
$30
$20
$10
$60
$50
$40
$30
$20
$10
Price of Crude Oil Price per Barrel since January 2000
November 4, 2004
Future Energy Expectations?
Risks of Higher Energy Prices•Supply Disruption Premium (Iraq, Russia)•Inability to Build U.S. Gasoline Inventories This Winter•Increasing Global Demand (Especially non-OECD)•Price Increases are Long-Run Trends
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