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13 January 2016
HY Corporate Credit
Energy
[Figure 4: Oil Supply-Demand Forecast
2013
2014b Nny 14
201511 7016c 2014/13
2015/14 201/1/15. :mt.!?
ciwivideratritiorn
OECD
46.1
45.6
46.6
45.6
-0.6
0.0
-0.1
US vs Europe GOP outlook
Non-OECD
45.7
46.8
47.8
49.3
1.1
1.0
1.4
How resilient is China demand?
ON Demand
91.7
92.4
93.4
948
0.7
0.9
1.3
Will lower oil price prompt upgrades?
US
10.2
11.7
12.7
13.3
1.6
1.0
0.7
Pace & magnitude of supply response
Other non.OPEC
44.4
44.8
45.1
45.5
0.4
0.3
0.0
Risk of delays, disruption & capes cuts
Non-OPEC Supply
54.0
50.6
57.8
688
IS
1.3
1.3
OPEC Nair
6.3
8.4
117
68
0.1
0.3
0.1
Libya
0.9
OA
0.7
0.7
0.9
-0.6
0.3
0.0
0.0
Is thew further downside supply?
Iran
2.7
28
2.8
2.8
2.8
0.1
0
0.0
0.0
Possibility of mid. l5 nuclear deal
Iraq
3.1
3.3
3.4
3.4
3.3
0.2
0.1
0.0
0.0
Other
24.2
23.2
23.4
22.0
22.5
-1.0
-1.2
-0.3
-1.4 Will Saudi add supply it non.OPEC falls?
Call on OPEC
30.9
29.6
30.3
28.9
292
-1 A
-0.0
as
-1.4
1 Ainbld reduction needed va Nov-14
542t* a Aar Math
Looking at this simplified supply and demand outlook for oil sums up our
thoughts on a longer term recovery. Given no expectation for a call on OPEC
in 2015, we believe oil prices will persist at lower levels through 2015,
especially in 1H 15 as the market is currently 1.4 million b/d oversupplied. The
basic levers that could improve the supply and demand dynamics in the next
year are the following in our minds: (i) better than expected economic growth
fie demand). (ii) more volatile seasonal weather patterns, (iii) faster than
expected Non-OPEC production declines, (iv) a sooner-than-scheduled OPEC
meeting (June currently), (iv) a sooner than scheduled OPEC meeting (June
currently), or (v) unexpected geopolitically-related production declines.
(Figure 5: GDP Forecast & Revision (% voy)
Fecticisl //wad
Dec' 14 WO
2014E 2016E
(meal Nun
. mice
Sep' 14 WO
2414E
2016E 2016E
G7
1.8
2.5
2.4
-0.1
0.0
0.0
US
2.4
3.5
3.1
0.1
0.1
-0.1
Japan
0.6
1.4
I
-0.0
0.1
0.2
Euro area
0.8
1.0
1.3
0.0
-0.1
-0.1
Aese IOA Japan)
6.0
8.2
6.1
-0.3
-0.7
-0.7
China
7.3
7.0
8.7
-0.6
-1.0
-1.3
India
5.5
8.5
8.5
0.0
0.0
0.0
EEMEA
2.3
1.9
2.5
0.4
-0.8
-0.4
Russia
0.5
.0.9
-0.4
0.0
-19
-1.8
DWI, hint-pica
0.8
1.5
2.9
-0.2
-os
0.1
0.7
1.9
-0.2
-0.5
0.0
Advanced re:enemies.
1.7
2.4
2.3
0.0
0.0
0.0
EM of-brier:Yoe
4.4
4.6
4.9
-0.2
-0.7
-0.6
Global
3.2
3.6
38
0.0
-0.3
-0.2
Sono Dana* Ow* economics
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