Embed Size (px)
DESCRIPTION
Commodities Covered. US Natural Gas US Electricity Global Crude Oil US Diesel. Natural Gas. Price History. US Production Pullback. Canada Production Decline to Continue. Global LNG Supply to Increase in 2009. Weather-Driven Heating Demand. Gas-Fired Generation Capacity Growth. - PowerPoint PPT Presentation
Citation preview
2
Commodities Covered
• US Natural Gas
• US Electricity
• Global Crude Oil
• US Diesel
3
Natural Gas
4
Price History
$1
$3
$5
$7
$9
$11
$13
$15
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
$/M
MB
tu
Sept. 11th Attack
Natural Gas Becomes Part of Inflation Index
3 Consecutive Mild Winters
Lowest Level of Storage Going into Winter
Record Storage Withdrawals
Production Curtailments Due to Gulf Hurricanes
Coldest Nov-Dec on Record
NG-Fired Power Booms
Hurricanes Katrina and Rita
Record Heat & Hurricane Activity Large YOY
surplus and Amaranth collapse
Warmest January on record, storage at all-time high
Hurricane Ivan Disrupts GOM
New record peak storage level
Colder-than-expected winter,
and crude reaches new
highs
Global recession materializes late in 2008
5
US Production Pullback
-
5,000
10,000
15,000
20,000
25,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Bcf
US Conventional Production
US Unconventional Production
6
Canada Production Decline to Continue
4000
4500
5000
5500
6000
6500
1995 1997 1999 2001 2003 2005 2007 2009
Bc
f
7
Global LNG Supply to Increase in 2009
0
5
10
15
20
25
30
35
40
45
50
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Bc
f/d
8
Weather-Driven Heating Demand
3,500
3,700
3,900
4,100
4,300
4,500
4,700
4,900
1995 1997 1999 2001 2003 2005 2007 2009
HD
Ds
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
9,000
Bc
f
Annual US Heating Degree Days (Left)
Annual Residential & Commercial Demand (Right)
9
Gas-Fired Generation Capacity Growth
2009 EIA Estimates
920,000
940,000
960,000
980,000
1,000,000
1,020,000
1,040,000
1,060,000
1,080,000
1,100,000
2008 2009 2010 2011 2012
MW
Other
Petroleum
Coal
NG
Existing
10
Recession Hinders Industrial Activity
-15
-10
-5
0
5
10
2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009 Q2
Ind
ex
& G
DP
(%
)
-240
-200
-160
-120
-80
-40
0
40
80
120
160
Bc
f
YOY US Dollar Index
US GDP Growth
YOY Industrial Demand (Right)
11
US Natural Gas Price Forecast
$0
$2
$4
$6
$8
$10
$12
$14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
12
Electric Power
13
Power Generation by SourceTexas California
New York PJM
16%
41%13%
11%
19%
43%
10%
13%
5%
18%
11%
70%
5%
6%
19%
30%
33%
18%
5%
14%
14
Northern California 2009 Forwards
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
Jun-06 Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09
$/M
Wh
15
ERCOT 2009 On-Peak Wholesale Forwards
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
Jun-06 Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09
$/M
Wh
16
New York Zone J 2009 On-Peak Forwards
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09
$/M
Wh
17
PJM (PA-NJ-MD) 2009 On-Peak Forwards
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09
$/M
Wh
18
Crude Oil
19
Price History
$10
$30
$50
$70
$90
$110
$130
$150
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
$/b
bl
Indicates New Market High
Hurricane Ivan
Exxon Valdez Spill
Persian Gulf War ends
Iraq invades Kuwait
Dissolution of the USSR
US bombs Iraq
Fears of recession weigh on prices following September 11
US invades Iraq; oil fields unharmed
OPEC increases output as demand eases
OPEC output cuts and resurgent demand
triple prices
Hurricanes Katrina and
Rita
Unrest in Lebanon, Iran, and Nigeria
Supply disruptions
in Iran, Nigeria
Strikes in Venezuela; buildup to Iraq War
OPEC cuts lead to sharp inventory
decline
Record weakness in US dollar; strong emergning
market demand
Global Recession
20
OECD Demand Plummets
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
1996 1998 2000 2002 2004 2006 2008
mb
pd
OECD PacificOECD EuropeOECD North America
21
China Signals Non-OECD Weakness
-4%
0%
4%
8%
12%
1Q1996 1Q1998 1Q2000 1Q2002 1Q2004 1Q2006 1Q2008
-30%
0%
30%
60%
90%
Non-Opec Demand Growth
China Real Import Growth (right)
China Real Export Growth (right)
22
Non-Opec Supply Growth Struggles
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
mb
pd
Global Demand GrowthNon-Opec Supply Growth
23
Opec Cuts Aggressively
*Bloomberg Data
20
22
24
26
28
30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
mb
pd
0
2
4
6
8
10
12
mb
pd
Spare Capacity (right)
Quota
Production
24
Strong US Crude Oil Stock Position
250
270
290
310
330
350
370
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
mb
Five-Year Average 2009 2008
25
Crude Oil Price Forecast
$0
$20
$40
$60
$80
$100
$120
$140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Prompt Month West Texas Intermediate
26
Diesel Fuel
27
Where to Watch
-300
-200
-100
0
100
200
300
400
500
600
700
Japan US Russia LatinAmerica
India Europe China Opec
kb
pd
Change in Distillate Demand, 2004-2008
28
Decoupling Falls Apart - China
-16%
-12%
-8%
-4%
0%
4%
8%
12%
1992 1994 1996 1998 2000 2002 2004 2006 2008
An
nu
al
Ch
an
ge
Index of Lagging Indicators
Index of Coincident Indicators
Index of Leading Indicators
29
Chinese Diesel Demand Falters
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
3.2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
mb
pd
5-Year Average 2007 2008
30
Has China Stabilized?
0
1000
2000
3000
4000
5000
6000
7000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
19
90 =
100
Shanghai Stock Exchange Composite Index
31
Still Awaiting the US Turnaround…
32
Demand Growth Depends on Econ Recovery
-60%
-40%
-20%
0%
20%
40%
60%
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
US Consumer Confidence
Transport Fuel Demand (right)
33
Retail Diesel Price Forecast
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
EIA Retail Diesel National Average
34
Overview
• The deteriorating economy has reduced the demand outlook for natural gas, particularly by the industrial sector. Weak pricing and tighter credit conditions have reduced the supply outlook. As a result, the supply/demand balance is expected to be tight, providing support to prices from currently weak levels.
• Look for most deregulated power markets to largely follow the natural gas market, although some regional nuances could drive prices for short periods of time near settlement.
• The global recession is weighing heavily on global oil demand and prices. Low prices create a challenging environment for supply development, however, which sets the stage for a strong price recovery when demand returns.
• Global diesel prices will continue to perform poorly as long as the global economy is in a tailspin. Once economic growth stabilizes, we expect the market to begin to recover in fairly short order.
