Investment Research General Market Conditions Commodities ... · war against Gaddafi caused Libyan production to come to a halt. Saudi Arabia currently has a spare capacity of around

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Investment Research — General Market Conditions

We no longer look for a sustained price rebound in Q2 and have taken our oil and metals

forecasts for both 2013 and 2014 lower. We now project Brent at USD106 this year on

average and USD99 in 2014, the latter is notably below the forward curve. Commodities

should be resilient in coming months with a little help from old friends such as EUR/USD

and global demand, but we see energy, metals and grains alike slightly down in H2. We

stress however that commodities have less potential to move lower on a faster-than-

expected Fed tapering of QE than e.g. equities. This, combined with the risk of a broad-

based USD rebound against the EUR and the Scandi currencies materialising later in the

year, suggests that consumers should be aware of the risk of higher costs of energy and

raw materials in local currency terms despite our call for USD prices of commodities

heading lower.

Commodities have stabilised following the April sell-off but failed to move higher as we

projected in April’s Commodities Forecast Update. Prices could move a little higher in

Q3 as EUR/USD withstands Fed talk of tapering quantitative easing (QE) and as global

demand should stay decent with US in recovery still and China not falling off a cliff

growth-wise. But for Q4 we look for stabilisation and some downside heading into 2014.

While demand will of course stay key for cyclical developments, rather it is on the supply

side things are moving rapidly at present - and it is this (positive supply shock in, not

least, oil) that is set to drive prices (lower) in the longer term.

The outlook for market balances has continued to point in a bearish direction with most

markets set for inventory builds this year. At the same time, geopolitics has failed to

move oil higher and no immediate threats suggest geopolitical concerns for oil should

remain limited. US shale could continue to surprise on the upside, underlining the size of

the ongoing oil supply shock (i.e. end of super-cycle story), and OPEC likely to

overproduce still. Although we still see leading indicators pointing to an ongoing

recovery in China we have to acknowledge that the economy looks increasingly fragile,

albeit not enough to trigger more stimuli from the Chinese authorities. Also, albeit

somewhat ambiguous, recent Fed communication hints that the Fed’s current balance-

sheet expansion could wear off more quickly than previously anticipated. We have for a

while been eyeing higher US yields and a stronger USD but there is a risk that both may

arrive earlier than we expected. Such market developments will clearly have

repercussions including in the commodities sphere and could eventually weigh on prices

of energy, metals and oil alike.

We have made downward revisions to our forecasts for oil and metals but revised slightly

up on grains. We now see Brent crude averaging USD106/bbl this year, down to USD99

in 2014. We also see base metals lower across the board; copper (previously our favoured

long bet) and zinc with the better fundamentals still though. The gold correction south

could go further and also grains to come lower intra-season - but we have made minor

changes to forecasts for these.

28 May 2013

Commodities Forecast Update

Consumers, beware of higher USD amid likely H2 sell-off

Danske commodity-price forecasts

Source: Bloomberg, Danske Bank Markets.

Commodity prices since New Year

Source: Macrobond, Danske Bank Markets.

Relative price forecasts (re-based)

13 1475.0

77.5

80.0

82.5

85.0

87.5

90.0

92.5

95.0

97.5

100.0

102.5

105.0

75.0

77.5

80.0

82.5

85.0

87.5

90.0

92.5

95.0

97.5

100.0

102.5

105.0

Gold

Aluminium

Copper

index (01/05/13=100)

Corn

Brent crude

Source: EcoWin, Danske Bank Markets.

Senior Analyst Christin Tuxen +45 45 13 78 67 [email protected]

28/05/13 2012 2013 2014

NYMEX WTI 95 94 93 90ICE Brent 103 112 106 99LME Aluminium 1,848 2,052 1,940 1,836LME Copper 7,309 7,953 7,558 7,441LME Zinc 1,862 1,965 1,960 1,910LME Nickel 14,811 17,594 16,019 15,200Gold 1,379 1,669 1,439 1,219Matif Mill Wheat 204 236 238 244CBOT Wheat 696 750 713 723CBOT Corn 542 694 632 623CBOT Soybeans 1,485 1,464 1,438 1,470

http://danskeanalyse.danskebank.dk/abo/ComForecastUpdate090413/$file/ComForecastUpdate_090413.pdf

mailto:[email protected]

2 | 28 May 2013 www.danskeresearch.com

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Oil: Size of the supply shock surprising yet again

Developments in oil-market fundamentals have continued to block a move higher despite

decent sentiment in risk markets more broadly. US supply continues to surprise on the

upside and is set to be a pivot for global oil markets going forward, see longer-term

outlook below. Also, while OPEC has cut production volumes to just off 31 mb/d, the

cartel has started to increase supplies somewhat again slightly of late. We think this could

be a first hint to the market that Saudi Arabia will not be the only OPEC member to

accommodate output rises elsewhere and thus could end up oversupplying the market this

year, see near-term outlook below.

Fundamentals: stock overhang to be continued

A glance at inventories underlines that the stock overhang which has been in place in

most countries since early 2009 has not improved in the year to date. Not least in the US

crude inventories are booming and OECD forward demand cover remains at the high end

of the 5Y range at around 60 days. It is worth noting, however, that the stock build at

Cushing, Oklahoma has come to a halt (at least temporarily), helping to sustain a

narrowing of the Brent-WTI price differential from more than USD20/bbl in early

February to now USD8/bbl, as US infrastructure is improving to help large crude supplies

reach refiners/consumers. This should in turn remind markets that the US is at the frontier

of shifts in the global oil market at present.

We see little indications that the persistent stock overhang will be worked off any time

soon. Although global demand should stay healthy given the ongoing recovery in China,

the US and Japan, so will supplies with the latter in the near term driven by OPEC

overproduction still.

OECD stocks and Brent US oil production



Geopolitics: Silence for now but Iran needs a ”solution”

One of the potential catalysts for a move higher in oil that we have previously pointed to,

namely the re-emergence of geopolitics on the oil-market agenda, has failed to materialise

despite continued turmoil in the Middle East-North African (MENA) region; indeed, the

lack of a major threat to oil supply (such as the Iran-Israel conflict escalating) has pushed

the geopolitical risk premium to a near-zero (if not negative) level. While we think this is

a bit unfair given the tensions still looming (Libya, Syria, and, of course, Iran), there is

little to suggest a re-pricing of this in the near term. That said, Iran is increasingly under

pressure financially as its oil revenue has plunged due to the severe sanctions the

international community led by the US has enacted against its oil exports. Finding a

solution to the Iranian situation is thus becoming ever more pertinent, and it cannot be

ruled out that the upcoming Iranian presidential election could be a catalyst for this.

Whether the “solution” proves diplomatic or military will, of course, be key for oil-price

developments.

US days of oil supply


US vs. North-Sea oil prices


Iran crude oil production


20

22

24

26

28

30

32

34

1 11 21 31 41 51

US days of crude supply2012201120102009Average [2008-2012]


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Near-term oil outlook: OPEC (Saudi!) reaction instrumental for oil prices

After having cut production extensively over the past six months, OPEC-12 and notably

Saudi Arabia increased production in April, according to preliminary data on shipments.

The rise in output comes despite both March and April seeing a large drop in oil prices,

notably down from the USD120 high mid February, and as global economic data has

started to soften in key regions. While we had argued that OPEC would end up producing

too much for this year as a whole as output soars not least in North America, leaving the

global oil market in a surplus for 2013, the timing of the step up in output is somewhat

surprising given the softness in oil prices of late.

In order to gauge the OPEC reaction going forward, we have estimated what arguably

represents a reaction function for the cartel. This provides an estimate of what level

OPEC-12 production should be at given the level of the oil price (Brent) and a measure of

oil market tightness. For the latter we use US days of supply of crude oil from the weekly

US Department of Energy (DOE) release. While this has obvious deficiencies in

incorporating global market tightness, this is outweighed by its timeliness.

We note that the model suggests that OPEC was in fact a little too slow to react in the

autumn of 2012, when global demand faltered despite the massive cuts in quota and

reasonably high compliance rates initially. At present, the model suggests that OPEC

production remains too high; the model-implied level of production has edged lower

recently as a result of the drop in prices and the larger than usual (seasonal) build-up in

days of supply in the US. This suggests that OPEC should in fact be cutting back on

production and is on the road to oversupply the market this year.

Much will depend on the Saudis, however. Saudi Arabia has acted as the swing producer

for a long time, or rather the central banker of the oil market, providing global consumers

with the crude needed during the recovery after the financial crisis, and essentially

conducting the oil-market equivalent of quantitative easing when the Arab Spring and the

war against Gaddafi caused Libyan production to come to a halt. Saudi Arabia currently

has a spare capacity of around 3.3 mb/d (Bloomberg estimates). The kingdom needs an

oil price of around USD85 to achieve fiscal balance. Although the Saudi oil minister al-

Naimi appears to be targeting USD100 at present, we are not convinced the Saudis will

continue to cut back on volumes to accommodate rising production elsewhere (Iraq, US).

OPEC-12 production, capacity, quota


OPEC reaction function


OPEC countries: fiscal BE oil price vs.

spare capacity

Changes in fiscal break-even prices

(selected oil producers; USD/bbl)

Source: IMF, Danske Bank Markets. Source: IMF, Danske Bank Markets.

0

20

40

60

80

100

120

140

160

0 2000 4000

Saudi Arabia

Iran

Spare capacity (kb/d)

Fis

ca

lBE

pri

ce (U

SD

/bb

l)

0

50

100

150

200

2008 2009 2010 2011 2012 2013

Iran IraqLibya Saudi Arabia


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The April uptick in OPEC may be a first hint that the cartel (read: the Saudis) are now

less focused on stabilising prices around a certain level. And given the lack of consensus

among cartel members on production response at the moment, this may lead OPEC to

leave the global market oversupplied again this year. We believe this will ultimately

weigh on prices. With OPEC due to meet in Vienna for its bi-annual gathering on 31 May

we could see some volatility in oil prices in the near term: we expect OPEC to keep its

output target unchanged at 30.0 mb/d but comments from oil ministers could move the

market. Ahead of the meeting the UAE oil minister said that current prices are “suitable

and fair” and thus echoed remarks from Saudi Arabia earlier in the year that oil prices at

USD100/bbl are “reasonable”.

Longer-term oil outlook: US light tight oil is a game changer

The importance of the supply shock to oil markets, which the US shale boom has fuelled,

was underlined by the bi-annual Medium Term Oil Market Report from the International

energy Agency (IEA) recently published. In this, the IEA coined the North-American

shale boom a game changer for global oil markets comparable to the rise of Chinese

demand in past decades. We have previously pointed to both the US shale boom but also

Brazil’s pre-salt oil, and the potential for Iraqi output to surge coming together to form a

massive supply shock to energy markets worldwide; see Commodities Quarterly (August

2012) and Commodities 2013 (January 2013).

Notably, the drilling of light tight oil (LTO), often denoted shale oil, and oil sands have

continued to surprise on the upside since the start of the year. Fundamentally, the

important driver of the shale adventure is mainly technological: the combination of

hydraulic fracking and horizontal drilling is key for exploration and production in shale

plays but the fracking process has also proved applicable to conventional sources of oil,

not least those with low permeability. However, the political approval of shale drilling in

the US has clearly also played a role. It is no secret that shale drilling has a range of

environmental consequences and that green movements have been advocating heavily

against this. Nonetheless, politicians have approved exploration and production on a wide

scale, lured by the revenue and jobs involved and the possibility of becoming less

dependent on OPEC whims.

For quite a while, this has been putting the US pipeline infrastructure under pressure, as

evident from the widening Brent-WTI price differential notwithstanding some narrowing

lately as discussed above. US export restrictions currently only allow crude oil to be

exported to Mexico and Canada, whereas no such restrictions exist for oil products. The

restrictions will likely come under pressure in the years to come as the infrastructure to

bring the US crude to consumers is gradually put in place. After all, the oil market is a

global one, where producers will be keen to bring crude to refiners not least in the non-

OECD region, still the key source of energy demand growth.

The market for natural gas remains a less global one due to the reliance on pipelines but

the rising use of liquefied natural gas (LNG), a process by which gas can be made fluid

and thus shipped over longer distances irrespective of pipelines, illustrates the move to let

excess supply meet demand. Approval of LNG projects remains a case-by-case decision

exemplified by President Obama recently approving a Texas LNG export project.

In general, we believe the past year’s developments in natural gas markets should serve as

a reminder to energy markets in underlining how new technology can push the cost curve

lower and prices with it over time.

While projections on a 20+ years horizon obviously have some uncertainty attached, the

latest long-term projections from the IEA on US import dependence suggest the US could

become a net exporter of natural gas by a small margin and reduce its oil import

dependency from around 60% today to some 20% by 2035. Obviously, this will have

US crude-oil pipelines

Source: Bloomberg.

US prices: natural gas vs. crude oil


http://danskeanalyse.danskebank.dk/abo/CommoditiesQuarterly060812/$file/CommoditiesQuarterly_060812.pdf

http://danskeanalyse.danskebank.dk/abo/CommoditiesOutlook2013FINAL/$file/CommoditiesOutlook2013_FINAL.pdf


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important consequences for the shipping industry, which will basically have to bring

OPEC crude to non-OECD countries. With an oil map characterised by a more self-

contained hemisphere, this in turn suggests a drive towards new crude benchmarks more

appropriate for e.g. the OPEC-Asia flow. For now, Brent remains the better indicator of

global oil market developments, with WTI distorted by massive US flows and lack of

infrastructure.

However, it is not just the sheer size of the volumes that matter: the quality of LTO is

exceptionally sweet (and light!), that is, the sulphur content is generally low, making it an

attractive blend for refiners/consumers. US refiners stand to benefit from this whereas

European refineries generally face a less bright outlook. With the crude supply being

tilted in a lighter direction after years in which heavy-sour Saudi crude was the marginal

barrel sent onto the market, this suggests that crack spreads (i.e. the product-crude price

differential) could narrow over time for lighter products. To what extent European

consumers will benefit from this will largely depend on refining investment and shipping

costs.

In the very long term, prices will be driven towards marginal costs and it is interesting to

note that at the level at which oil prices (Brent) have been trading on average in the year

to date, i.e. just below USD110/bbl, most sources of oil are profitable even for high-end

producers. Thus, even in the absence of new technological changes and potential

downward pressure on costs resulting from this, we reckon that oil prices could fall more

permanently below USD100 and most producers would still be willing to meet demand.

3-12M outlook: crude price to stabilise and head lower – light-heavy spread

to widen

On the whole, we expect global inventory builds this year. However, we see limited

potential for EUR/USD to drop on a 3M horizon, which together with a healthy demand

outlook for the US and parts of Asia suggests oil prices should stay within the USD100-

100/bbl interval. Further out, broad-based USD strength on Fed tapering QE should

weigh on oil prices and eventually, during the course of 2014, allow prices to move more

permanently below USD100. We forecast Brent at USD106 this year on average and

USD99 in 2014. Our forecasts are now below the forward curve for most for 2014. We

stress, however, that while we see prices stabilising and even moving lower in the longer

term, risks for oil prices continue to lie chiefly on the upside with geopolitical tensions

flaring up again, an obvious candidate for price spikes.

Crude oil at par with fair value Gasoil weaker than fundamentals

06 07 08 09 10 11 12 13 1425

50

75

100

125

150

175

+/- 2 std. dev.

Model Danske

forecast

USD/bbl

Actual (ICE Brent)

Forward

06 07 08 09 10 11 12 13250

500

750

1000

1250

1500

1750USD/MT

+/- 2 std. dev.

ICE gasoil 1-pos - actual

Fair value



Break-even production costs for

different sources of crude oil

Source: Wopd Mackenzie, Danske Bank Markets.

0 50 100 150

Oil sands int.

Oil sands bit.

Ultra-deep

Deepwater

Offshore

Onshore

Break-even production costs, USD/bbl


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Crack spreads: light-heavy spread set for slight widening

Regarding crack spreads, the ICE gasoil spread to crude, representative of the lighter end

of the barrel, has seen a sustained move lower since the autumn with the gasoil spread to

crude also halved to currently USD10/bbl. Our models suggest that gasoil prices have

dropped too extensively recently (with the caveat that uncertainty bands are somewhat

wide); fair value is currently held up by distillate stocks in the US running well below the

levels seen in previous years. Part of the explanation for this is that for refineries the

maintenance in Q1 was extra intensive this year, suggesting that with refiners coming

back fair value (rather than prices) could correct lower. With a mix of US light tight oil

and heavy Saudi crude set to make up the key supply additions over our forecast horizon,

we see little overall direction for crack spreads overall. That said, with the US crude still

not able to reach consumers that easily, if we are right that the Saudis will maintain

production at historically elevated levels and that global industrial demand for (mainly)

light products will stay decent, the light-heavy spread could widen as we head into 2014.

Crack-spread forecasts: gasoil and 1% fuel oil prices (spread to Brent crude)


-185

-180

-175

-170

-165

-160

-155

-150

-145

138 140 142 144 146 148 150 152 154 156 158

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014

ULSD 10ppm CIF NWE cargo (RHS) 1.0% fuel oil FOB NWE cargo

Gasoil spread to crude moving lower



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Metals: Laying off Dr. Copper

Base metals markets have continued to look for signs of Chinese buying picking up on

the back the recovery in activity elsewhere. However, so far they have been disappointed:

a re-stocking phase has failed to materialise for a number of reasons.

First, the Chinese recovery has proved less sturdy than expected and while leading

indicators continue to point to healthy demand into H2 13, the strength of the recovery

has been disappointing to both us and the market. Part of the reason for this is that China

is currently undergoing a structural adjustment which entails a gradual decline in Chinese

potential GDP growth, i.e. the days of double-digit growth are over.

Second, and related, the Chinese authorities have become more tolerant of a deceleration

in growth. The new leadership has refrained from announcing new large-scale

infrastructure projects as the government attempts to steer Chinese growth from having

been largely investment-driven to become more geared towards consumer demand. As a

result, demand for both energy and raw materials is under pressure. In addition, the

People’s Bank of China is less keen to stimulate the economy despite subdued inflation to

avoid fuelling a booming property market and, notably, USD/CNY has been allowed to

drift consistently lower this year as the country moves gradually towards a floating

exchange rate and convertible currency. This suggests that while metals demand will not

fall off a cliff, the support seen from especially China in recent recoveries should not be

expected this time round.

Third, inventories of not least copper are booming due to a pick-up in mine supply in the

past six months and the stock overhang in the red metal has taken the market somewhat

by surprise due to the lack of transparency in world stocks caused by the ‘invisible’

bonded warehouse stocks in China. While mines have had a good run recently, we are

less certain that this provides a guide to copper supply going forward although the market

could see its first surplus for a few years for 2013. With an industry that is notoriously

prone to labour strikes and weather events and is fighting mounting issues with falling ore

grades and a lack of new deposits, we stress that copper is likely to be the subject of high

volatility for years to come as prices will need to stay at the high end of the cost curve to

incentivise new mine projects.

We have made downward revisions to all our base metals forecasts and now see even

copper a little below the forward curve; on aluminium, we remain somewhat more

bearish. Specifically, we look for LME copper to average around USD7,550/t this year,

slightly down to USD7,450/t next year; aluminium prices should feel the burden of

slightly lower energy costs over time and drop from USD1,950/t in 2013 to USD1,825/t

next year.

Copper around ‘fair’ Aluminium still below model level

06 07 08 09 10 11 12 13 142000

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000

13000

14000

Danske

forecast

+/- 2 std. dev.

Model

Actual

(Copper, LME 3M)

USD/ton

Forward

06 07 08 09 10 11 12 13 141250

1500

1750

2000

2250

2500

2750

3000

3250

3500

3750

4000

Danske

forecast+/- 2 std. dev.

Model

Actual

(Aluminium, LME 3M)

USD/ton

Forward

Source: Reuters EcoWin, Danske Bank Markets

Source: Reuters EcoWin, Danske Bank Markets

Base metals stocks-to-use


Copper market balance

Source: Macrobond, Danske Bank Markets


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Grains: Soybeans – this year’s Achilles’ heel

The big story in grains markets over the past month has been the surge in soybean prices:

plantings of soy have been delayed in the US with less than 25% completed compared

with 75% at the same time last year. So far, the usual ripple effects to wheat and corn

have been limited as projections for this year’s harvest have been for strong crop

production. Notably, recent reports from the US Department of Agriculture (USDA) have

revised higher projections for global ending stocks-to-use ratios for the current marketing

year. While grains markets will – as previous years’ experience suggests – be in the hands

of the weather intra-season, we look for some normalisation in prices this year as the

latest weather projections from both the US and Australian meteorological institutes

suggest that La Nina/El Nino patterns are weakening at the moment, thus making the

likelihood of extreme weather events this season less likely.

We look for grains to head a little lower in the near term in the absence of severe weather

disruptions but continue to see upside in grains in the longer term as agricultural

productivity is set to be impaired by climate change still.

Wheat Corn Soybeans

06 07 08 09 10 11 12 13 14300

400

500

600

700

800

900

1000

1100

1200

1300

1400

1500

300

400

500

600

700

800

900

1000

1100

1200

1300

1400

1500USD/bu

Forward

Fair value

Actual

(CBOT wheat 1-pos)

+/- 2 std. dev.

Danske

forecast

USD/bu

06 07 08 09 10 11 12 13 14100

200

300

400

500

600

700

800

900

1000

100

200

300

400

500

600

700

800

900

1000

Forward

Danske

forecast

Fair value

+/- 2 std. dev.

Actual (CBOT corn - 1-pos)

USd/bu

06 07 08 09 10 11 12 13 14250

500

750

1000

1250

1500

1750

2000

250

500

750

1000

1250

1500

1750

2000

Fair value

Actual (CBOT soybeans 1-pos)

USD/bu

Danske

forecast

+/- 2 std. dev.

Forward

USD/bu




Global stocks-to-use ratios for grains

Source: Macrobond, Danske Bank Markets

Oceanic Niño Index (ONI) Southern Oscillations Index (SOI)

Source: NOAA, Danske Bank Markets. Source: Aussie Met, Danske Bank Markets.

-2

-1.5 -1

-0.5 0

0.5 1

1.5

2

2000 2005 2010

ONI La Nina El Nino

-40

-30

-20

-10

0

10

20

30

2000 2005 2010

SOI La Nina El Nino


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Hedging: consumers, beware of USD strength amid

commodities sell-off

On the whole, we think commodities have less potential to move lower on faster Fed

tapering of QE than e.g. equities. This, combined with the risk of a broad-based USD

rebound against the EUR and the Scandi currencies, suggests that consumers should be

aware of the risk of higher cost of energy and raw materials in local currency terms

despite our call for USD prices of commodities heading lower.

For oil, while our forecasts are now below those of the market (forwards) for most of next

year, we emphasise that risks remain mainly on the upside for oil, not least due to

geopolitical tensions still around. Consumers may therefore consider using price set-

backs to lock in prices for next year. We advise leaving some longer-term exposure open

to be able to benefit from a move lower during the course of 2014 but EUR-based

consumers should be aware of the likely move lower in EUR/USD.

On base metals, risks also lie mainly on the upside, with China in a recovery phase still

and metals so far failing to move higher this year. Clients with a long exposure to

aluminium (such as hedgers of inventories) should consider locking in current prices as a

potential decline in energy prices and/or a rise in interest rates leading financial deals to

be unwound could push prices of the light metal lower in 2014. Consumers should

consider locking in some copper expenditures despite our forecast being below forwards

as the red metal will likely stay notoriously volatile.

Regarding grains, we are less convinced than the market at present that corn and soy

prices should drop from here, suggesting that consumers may wish to take advantage of

relatively low forward prices (compared with spot and our forecast) and lock in prices

further out.


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Danske Bank Markets commodity-price forecasts


Danske Bank Markets oil-products forecasts


28/05/13 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 2012 2013 2014

NYMEX WTI 95 94 93 93 91 90 90 90 90 94 93 90ICE Brent 104 113 103 105 102 100 99 98 97 112 106 99

Aluminium 1,843 2,041 1,900 1,925 1,895 1,870 1,845 1,825 1,805 2,052 1,940 1,836Copper 7,318 7,958 7,300 7,500 7,475 7,460 7,445 7,435 7,425 7,953 7,558 7,441Zinc 1,859 2,054 1,900 1,950 1,935 1,925 1,915 1,905 1,895 1,965 1,960 1,910Nickel 14,795 17,376 15,000 16,000 15,700 15,500 15,300 15,100 14,900 17,594 16,019 15,200

Gold 1,380 1,631 1,425 1,375 1,325 1,275 1,225 1,200 1,175 1,669 1,439 1,219

Matif Mill Wheat (EUR/t) 205 245 233 233 240 242 244 245 247 236 238 245CBOT Wheat (USd/bushel) 697 737 700 705 710 715 720 725 730 750 713 723CBOT Corn (USd/bushel) 544 715 600 605 610 615 620 625 630 694 632 623CBOT Soybeans (USd/bushel) 1,488 1,449 1,425 1,435 1,445 1,455 1,465 1,475 1,485 1,464 1,438 1,470

2014

Energy:

front month (USD/bbl)

Base metals:

LME 3M (USD/t)

Precious Metals:

spot (USD/oz)

Agriculturals:

front month

2013

Oil products forecasts

28/05/2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014

Jet fuel CIF cargo (USD/MT) 937 1033 935 955 935 922 917 909 902 1024 964 913ULSD 10ppm CIF NWE cargo (USD/MT) 883 978 900 920 900 887 882 874 867 986 924 878ICE gasoil (USD/MT) 871 956 865 885 865 852 847 839 832 954 893 843ICE Brent (USD/bbl) 104 113 103 105 102 100 99 98 97 112 106 993.5% fuel oil FOB ARA barge (USD/MT) 579 612 555 565 541 524 515 507 500 624 568 5121.0% fuel oil FOB NWE cargo (USD/MT) 611 643 595 605 581 564 555 547 540 663 606 552

Crack spread forecasts

(USD/MT) 28/05/2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014

Jet fuel CIF cargo (USD/MT) 174 208 180 185 187 189 191 191 191 205 190 191ULSD 10ppm CIF NWE cargo 120 153 145 150 152 154 156 156 156 167 150 156ICE gasoil (USD/MT) 108 131 110 115 117 119 121 121 121 135 118 1213.5% fuel oil FOB ARA barge (RHS) -184 -213 -200 -205 -207 -209 -211 -211 -211 -195 -206 -2111.0% fuel oil FOB NWE cargo -152 -182 -160 -165 -167 -169 -171 -171 -171 -156 -169 -171

Brent (USD/MT) 763 825 755 770 748 733 726 718 711 819 774 722

2014

2014

AVERAGE

AVERAGE

2013

2013


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Disclosure This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske

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