CRUDE OIL TRADING STRATEGY

OIL MARKET OVERVIEW, ANALYSIS AND TRADING

MARKET OVERVIEW

WHICH COUNTRIES HAVE IT MOST

MAJOR PRODUCERS

 Russia17%

 Saudi Arabia16%

 United States15% China

6%

 Canada5%

 Iraq5%

 Iran5%

 Mexico4%

 Venezuela4%

 United Arab Emirates

4%

 Brazil4%

 Kuwait4%

 Norway3%

 Nigeria3%

 Algeria3%

 Angola3%

Oil Production by Country

PRODUCTION FROM OPEC COUNTRIES

MAJOR CONSUMERS

TRADING INFO

EXCHANGES:

• NYMEX

• PMEX

FUTURES CONTRACT: PRICE INCREASES INCREMENTALLY BY $0.4 TO $0.65 FOR FARTHER CONTRACTS

HISTORICAL PRICES

MARKET ANALYSIS

MARKET ANALYSIS

SUPPLY-DEMAND GAP

DEMAND-SUPPLY GAP

THE IRAN IMPACT

• EIA BELIEVES IRAN HAS THE TECHNICAL CAPABILITY TO RAMP UP CRUDE OIL PRODUCTION BY AT LEAST 700,000 BBL/DAY (BBL/D) BY THE END OF 2016. (EIA SHORT-TERM ENERGY OUTLOOK)

• IRAN’S OIL PRODUCTION REMAINED AT 2.8 MB/D, WITH CHINA AND INDIA EMERGING AS THE COUNTRY’S TOP IMPORTERS. IRAN IS EXPECTED TO TARGET THESE COUNTRIES WHEN SANCTIONS ARE LIFTED. (WORLD BANK COMMODITY MARKETS OUTLOOK – JUL 22, 2015)

FUTURE OUTLOOK

• WORLD ECONOMY

Source: OPEC Monthly Oil Market Report (Jul 13, 2015)

US EIA FORECAST (JUL 2015)

If a comprehensive agreement is reached, EIA estimates that the re-entry of more Iranian oil could result in a $5/b-$15/b lower baseline STEO price forecast for 2016.

INTERNATIONAL ENERGY AGENCY REPORT

• NON-OPEC SUPPLY AS A WHOLE, AFTER EXPANDING BY A MASSIVE 2.4 MB/D IN 2014, LOOKS ON TRACK TO SLOW TO 1 MB/D IN 2015 AND STAY FLAT IN 2016. DEMAND GROWTH, MEANWHILE, IS PROJECTED TO REACH 1.2 MB/D IN 2016. (IEA OIL MARKET REPORT – JUL 10, 2015)

• WE EXPECT OIL PRICES TO BE CAPPED AT C.USD 55 (FOR A BARREL OF WTI) FOR THE FIRST HALF OF 2015. ONCE PHYSICAL MARKETS BEGIN TIGHTENING IN 2016 WE ANTICIPATE PRICES STARTING TO NORMALISE TOWARDS THEIR LONGER-RUN INCENTIVE PRICE LEVEL, WHICH WE SEE AT AROUND USD 65. HOWEVER, ANY PRICE NORMALISATION WILL LIKELY BE GRADUAL CONSIDERING THE BY-THEN LARGE INVENTORY OVERHANG FROM THE 2014/15 EPISODE. (FEB 17, 2015)

TRADING STRATEGY

A WORD OF CAUTION FOR FUTURES TRADERS

• STATISTICS TELL THAT 90% OF TRADERS LOSE!

• EXPERIENCED TRADERS RECOMMEND THE TARGET FOR THE FIRST YEAR SHOULD BE NOT TO LOSE YOUR MONEY! (RATHER THAN AMBITIOUS TARGETS OF 50%, 100% OR 200% RETURN)

FURTHER TRADING TIPS AND PRECAUTIONS

• INVEST ONLY SPARE MONEY (ONE THAT YOU WOULD NOT COUNT ON FOR THE NEXT 6 MONTHS)

• AVOID OVEREXPOSURE: HAVE ENOUGH MARGIN THAT THE ACCOUNT IS NOT WIPED OUT EVEN IF OIL DROPS TO $15/B

• LIMIT LOSSES: OPERATE WITH STRICT STOP LOSSES

• LOCK-IN SMALL PROFITS: MOVE TAKE-PROFIT POINT UPWARD IN UP-TREND

TRADING STRATEGY: ENTRY AT $45

WHY $45:

• WITHIN $3 OF 5-YEAR-LOW

• LEVEL HAS BEEN CROSSED TWICE DURING RECENT FALL, BUT PRICE REBOUNDED WITHIN DAYS

• JUST BELOW EIA AVERAGE PRICE FORECAST FOR 2015, 2016, EVEN WITH IRAN ACCOUNTED FOR.

INVESTMENT AMOUNT: 15% OF TOTAL AVAILABLE FOR TRADING

TRADING STRATEGY: ADD AT $40

WHY $40

GOLDMAN SACHS IN JAN 2015 PREDICTED OIL NEEDED TO TRADE IN $38-$40 RANGE FOR MOST US RIGS TO BE UNAFFORDABLE. THE BANK REDUCED ITS 6 MONTHS FORECAST TO $39 AND 12 MONTHS FORECAST TO $65, THEN.

HTTP://WWW.BLOOMBERG.COM/NEWS/ARTICLES/2015-01-12/GOLDMAN-SEES-NEED-FOR-40-OIL-AS-FORECAST-FOR-OPEC-CUT-ABANDONED

INVESTMENT AMOUNT: 15% OF TOTAL AVAILABLE FOR TRADING

TRADING STRATEGY: ACCUMULATE AT $35

WHY $35

WILL BE UNAFFORDABLE FOR ALL OTHER THAN OPEC COUNTRIES TO PRODUCE. MAY HAPPEN IF OPEC EXHIBIT MORE AGGRESSION STRIVING TO REGAIN LOST MARKET SHARE, OR IN CASE OF A CRASH-LIKE FALL POSSIBLY TRIGGERED BY FURTHER WEAKNESS IN DEMAND, CHINESE STOCK MARKET CRASH OR GEO-POLITICAL CONCERNS.

INVESTMENT AMOUNT: 25% OF TOTAL AVAILABLE FOR TRADING

QUOTE OF THE WEEK

• THE ONLY TRUE WISDOM IS IN KNOWING YOU KNOW NOTHING - SOCRATES

THANK YOU