1、February 22, 2010 Commodities: Energy Weekly Goldman Sachs Global Economics, Commodities and Strategy Research 1 ry 22,Commodities Energy Weekly Stronger timespreads driving price rallies as fundamentals tighten We expect timespreads to continue to tighten as physical fundamentals improve, lifting W
2、TI crude oil prices into a new $85-$95/bbl trading range in 2010. WTI price rallies continue to be driven by stronger timespreads as near-term fundamentals tighten Concealed within the recent range-bound trading of WTI crude oil prices, a more interesting pricing dynamic has been forming. The last t
3、wo rallies have been driven in large part by a strengthening of WTI timespreads, while the last two sell-offs have been driven primarily by a decline in long-dated WTI prices. Near-term fundamentals tightening off stronger economic activity in the United States and Japan and a string of supply disru
4、ptions This week, WTI crude oil timespreads continued to strengthen off positive economic news from the 1stand 2ndlargest developed market economies the United States and Japan. The United States reported positive year-on-year growth in industrial production for the first time since March of 2008, a
5、nd Japan reported that its economy expanded at a 4.6% annual rate in 4Q2009, well above the consensus expectation of 3.5%, led by strong exports. Further, negative supply news, including a disruption in North Sea crude oil production, reduced Venezuelan fuel oil exports due to a power generation cri
6、sis, and the potential for a refinery strike in France, suggests a tighter near-term supply-demand balance. We continue to expect $85-$95/bbl to become the new trading range in 2010 We continue to expect that improving near-term oil market fundamentals will continue to tighten WTI timespreads. Conse
7、quently, we believe the more important trading range for WTI crude oil prices is not the low $70-low $80/bbl range they have traded in since last October, but rather the $85-$95/bbl range that long-dated WTI crude oil prices have been trading in over the same time period, and we continue to expect t
8、hat as the near-term fundamentals of the oil market continue to improve, strengthening timespreads will lift WTI crude oil prices into this $85-$95/bbl range. David Greely (212) 902-2850 | Goldman Sachs thousand b/d year-on-year change, Japanese oil demand (right axis) Exhibit 8: Japanese Fuel oil
9、consumption is already at record lows, suggesting limited negative impact from a potential restarting of idle nuclear capacity TWh (left axis); thousand b/d, fuel oil demand -40-30-20-1001020Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11-1400-1200-1000-800-600-400-200020040060
10、0Japanese oil demandJapanese industrial productionGS IP forecastGS oil demand forecastIEA oil demandestimates1001502002503003501984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 201020040060080010001200Nuclear outputFuel oil demandShutdown due to security concernsShutdown due to earthq
11、uakeSource: IMF, GS Global ECS Research. Source: IEA, GS Global ECS Research. Negative supply news suggests a tighter near-term supply-demand balance in the oil market We continue to expect that increased demand off the ongoing global economic recovery against a backdrop of constrained long-term cru
12、de oil supply will be the driver of higher WTI crude oil prices in coming months. The longer-term supply issues were highlighted this week by a string of negative supply news, including disruption of North Sea crude oil production, reduced Venezuelan fuel oil exports due to a power generation crisis
13、, and the potential for a refinery strike in France. North Sea crude oil output reduced by 150-170 thousand b/d as Buzzard platform requires unexpected repairs On February 18, it was announced by its operator, Nexen, that crude oil production at the Buzzard oil platform in the UK North Sea was reduc
14、ed to 30-50 thousand b/d, in order to facilitate repairs to the separator unit. This represents a 150-170 thousand b/d decline in supply from the Buzzard oil field relative to its 4Q2009 production of 200 thousand b/d. In its 4Q2009 earnings press release, Nexen announced that repairs to the Buzzard
15、 platform will keep output reduced for the next several weeks. However, the potential for the repairs to take longer than anticipated suggests that the draw on inventories could accelerate and timespreads could tighten faster than expected, with an upside risk to prices. Venezuelan fuel oil and dies
16、el exports cut as power generation crisis continues There was also news this week that the Venezuelan power generation crisis is beginning to spill over to the broader oil market, with PDVSA likely to reduce exports of diesel and fuel oil as it tries to increase domestic power supplies. The crisis w
17、as precipitated by a drought which has left water levels in Venezuelas Guri Dam 33 feet below last year and at less than half its capacity. The Guri Dam powers the worlds third-largest hydroelectric plant, which provides 73% of Venezuelas electricity. If the water level were to fall another 82 feet
18、before the dry season ends, power generation at the plant would come to a standstill. February 22, 2010 Commodities: Energy Weekly Goldman Sachs Global Economics, Commodities and Strategy Research 9 The shortfall in hydro-power has led to severe electricity rationing across the country and a move to
19、 increase oil-fired power generation. Venezuelan fuel oil use increased from 30.5 thousand b/d in 2008 to 40.1 thousand b/d in 2009. Venezuelan president, Hugo Chavez, has stated that repairs to two large thermo-electric plants will soon add 700 MW of power and the government is installing a dozen n
20、ew 12 MW plants that should be ready soon. Should these goals be met, it could add 30-40 thousand b/d of new fuel oil demand, however, we believe it is unlikely that these goals will be met in such a short timeframe, as much of the infrastructure remains in poor condition. Much of the plan seems to
21、center on increasing power generation at the massive 2000 MW capacity Planta Centro plant by 800 MW. However, the infrastructure at Planta Centro has suffered from years of underinvestment and has been producing at less than one-quarter of its capacity for several months, with reports that at least
22、one of its 3 fuel oil turbines is inoperable. The government is also looking to increase generation at the Tocoa plant by 134 MW. Given that the repairs required will likely prove far more extensive, we expect that incremental demand for fuel oil will likely be limited to 20-25 thousand b/d. Total s
23、trike Total SAs six refineries in France have begun to shut-down as workers walk out in protest at the companys decision to permanently close the idled Flanders refinery. According to its annual report, Total SAs French refineries refined 701 thousand b/d in 4Q2009, down from the 944 thousand b/d pr
24、ocessed in 4Q2008 as poor refining margins motivated run cuts. While the reductions in refining will likely cause some short-run disruption, there is ample spare capacity in both the US and Europe to offset a decline. Consequently, we continue to believe that over the medium-term disruptions at the
25、well-head will be far more important to the market in the current environment than disruptions at the refinery. However, in the near-term, reduced runs at the French refineries could accelerate the draw on petroleum product inventories while reducing the draw on crude inventories. As product invento
26、ries remain much higher than crude oil inventories relative to normal, this could accelerate the process of reducing the overhang and product inventories and rebalancing the market. February 22, 2010 Commodities: Energy Weekly Goldman Sachs Global Economics, Commodities and Strategy Research 10 US o
27、il stocks Million barrels US crude oil stocks Million barrels Product 12-Feb-10 15-Jan-10 13-Feb-09 4Wk YearTotal Petrol 1045.5 1051.0 1038.5 -5.5 7.0Crude Oil 334.5 330.6 350.6 3.9 -16.1Total Product 711.0 720.4 687.9 -9.4 23.1Mogas 232.1 227.4 218.7 4.6 13.4Jet Fuel 42.7 43.7 41.0 -1.1 1.7Distilla
28、te 153.3 157.1 140.8 -3.9 12.5Resid 37.9 38.8 36.3 -0.9 1.5Other 134.1 133.4 127.0 0.7 7.1ChangeEnd-of-WeekSource: DOE. 260280300320340360380400Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec2007200820092010Source: DOE. US total hydrocarbon stocks Million barrels US distillate stocks Million barrels 800
29、85090095010001050110011501200Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec2008200720092010Source: DOE. 8090100110120130140150160170180Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec2008200720092010Source: DOE. US motor gasoline stocks Million barrels US residual fuel stocks Million barrels 175185195205215
30、225235245Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec2008200720092010Source: DOE. 253035404550Jan Feb Mar Apr May Jun Jul Sep Oct Nov Dec2007200820092010Source: DOE. February 22, 2010 Commodities: Energy Weekly Goldman Sachs Global Economics, Commodities and Strategy Research 11 WTI forward curve US$
31、/bbl WTI-Brent forward curve US$/bbl 7274767880828486Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-1118Feb10 11Feb10 21Jan10Source: Goldman Sachs Global ECS Research. 0.000.501.001.502.002.50Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-1218Feb10 11Feb10 21Jan10Source: Goldman Sachs Global EC
32、S Research. Historical realized WTI volatility Percentage Historical WTI prices US$/bbl 10%20%30%40%50%60%70%80%90%100%110%Jan 00 Apr 01 Jul 02 Oct 03 Jan 05 Apr 06 Jul 07 Oct 08 Jan 10Source: Goldman Sachs Global ECS Research. 15.035.055.075.095.0115.0135.0155.0Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Ap
33、r-06 Jul-07 Oct-08 Jan-10Source: Goldman Sachs Global ECS Research. 321 NYMEX forward curve US$/bbl NYMEX heating oil crack forward curve US$/bbl 2.004.006.008.0010.0012.0014.00Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-1218Feb10 11Feb10 21Jan10Source: Goldman Sachs Global ECS Research. 5.006.007
34、.008.009.0010.0011.0012.0013.0014.0015.00Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-1218Feb10 11Feb10 21Jan10Source: Goldman Sachs Global ECS Research. February 22, 2010 Commodities: Energy Weekly Goldman Sachs Global Economics, Commodities and Strategy Research 12 Historical NYMEX heating oil cr
35、ack prices US$/bbl RBOB crack forward curve US$/bbl -50510152025303540Jan-00 Apr-01 Jul-02 Oct-03 Jan-05 Apr-06 Jul-07 Oct-08 Jan-10Source: Goldman Sachs Global ECS Research. 0.002.004.006.008.0010.0012.0014.00Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-1118Feb10 11Feb10 21Jan10Source: Gold
36、man Sachs Global ECS Research. Historical RBOB crack prices US$/bbl USGC 1.0 percent fuel oil crack forward curve US$/bbl -10-50510152025303540Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10Source: Goldman Sachs Global ECS Research. -9.00-8.00-7.00-6.00-5.00-4.00-3.00-2.00Feb-10 May-1
37、0 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-1118Feb10 11Feb10 21Jan10Source: Goldman Sachs Global ECS Research. February 22, 2010 Commodities: Energy Weekly Goldman Sachs Global Economics, Commodities and Strategy Research 13 Reg AC We, David Greely, Jeffrey Currie and Stefan Wieler, CFA, hereby certif
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