Commodities Strategy | November 2015 Lower For Longer Oil Market Update Seth Kleinman Managing Director
[email protected] +44 (0) 207 986 4556 Pedro Medeiros Director
[email protected] +55 21 3282 9960 See Appendix A-1 for Analyst Certification, Important Disclosures and non-US research analyst disclosures Citi Research is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Certain products (not inconsistent with the author’s published research) are available only on Citi's portals. This presentation was approved for distribution on 12 October 2015; the disclosures in Appendix A1 are current as of the same date. Agenda Four key themes ● (1) Saudi pulling back production because crude has nowhere to go ● (2) Are low oil prices really positive for medium-term demand growth? ● (3) North America shale vs. Deepwater vs. OPEC supply in the medium-term ● (4) Asia is the only market short left – But, there are potential impacts from other sources 1 Current State of Play: Global Oversupplies are Heading into Storage 1Q’15 saw crude stocks blow-out before strong refinery runs started to shift the oil surplus downstream. Crude and petroleum product stocks are now both at elevated levels and weekly observed oil inventories are showing little sign of coming down from record levels.