“Many thanks for another great seminar last week. I hope I did not jump into the discussions and your lecturing too much. It is easy to get carried away when discussing charts and markets.

“I have moved some of my investments into European Autonomies (LIN, RI, NESN, NOVO B), following the discussion during the seminar (for tax reasons European shares are best for me). I looked at a couple of breweries but found them too extended to their MA. I also considered RCO (Remy) on Monday and was ready to buy on Tuesday but it had shot up 8% overnight!

“I promised you I would forward any new reports from DNB Markets on the oil market. I found one in my inbox today on the 2013 outlook which I have attached. I have not had time to read it.”

Eoin Treacy's view Thank you for your active participation at last week's event. At The Chart Seminar we attempt to foster an environment where delegates can feel free to share their considerable experience for the benefit of the group. Your considerable expertise in the oil sector was very educational. Thanks also for the attached report which is sure to be of interest to the Collective. Here is a section:

We forecast 'Call on OPEC' will decrease by 0.7 million b/d on a combination of strong growth in non-OPEC supply (particularly from North-America) and weaker net oil demand growth.

More refinery capacity will be added next year than net growth in global oil demand. IEA estimate that more than 4 million b/d of capacity will be added in 2013 if we include desulphurization capacity, upgrading units and CDU expansions. Most of the additions will be in Asia, the Middle East and Former Soviet Union (FSU).

OECD stock levels are high when measured in days of demand coverage. Unless OPEC cuts back output next year, OECD stocks will continue to grow.

Spare CapacitySince we believe there will be a need for OPEC to cut production next year and since we believe Saudi Arabia will target oil prices around 100 $/b, the implication of lower output from OPEC is higher spare capacity. In addition the production capacity is expected to grow in Iraq (Rumaila/West Qurna/Majnoon), Libya (Elephant) and Angola (Kizomba/Block 31).

US oil demand is expected to fall 0.1 million b/d next year while liquids supply is expected to grow 0.7 million b/d on the back of the new shale liquids industry. This means US crude imports should continue to decrease, hence making more crude oil available for other consumers.

We believe global oil demand growth will be weak also in 2013. A high oil burden normally provides less "bang for the buck" with respect to the intensity factor vs economic growth. Instead of growing 0.5 percent for every percent growth in global GDP, we believe 2013, just as 2012, will offer significantly lower oil demand growth per unit GDP-growth than the long-term average of 0.5. Chinese oil demand growth has been weak so far in 2012 and with expectations of weaker economic growth next year there is probably no reason to expect trend-line growth of Chinese oil demand in 2013 either. We think net global oil demand will grow only 0.7% in 2013 which is very similar to 2012. Chinese oil demand is expected to grow 366 kbd next year vs 271 kbd in 2012. This is meaningfully weaker than the ten-year average growth of 500 kbd. European oil demand will continue to fall, next year by 0.4 million b/d, slightly less than in 2012. OECD Asia oil demand growth, which has been so strong in 2012 (+358 kbd ytd) due to oil used in the power sector in Japan, is expected to fall to about zero in 2013. That could even prove to be optimistic as the 2012-numbers have been inflated by all the nuclear outages (and if many of these reactors return to service next year, oil demand in Japan will start falling). Total OECD demand is expected to fall 0.5 million b/d next year while total non-OECD demand is expected to rise by 1.2 million b/d, providing net global oil demand growth of 0.6 million b/d. We still forecast decent demand growth in Asia, Latin America and most of the Middle-East, but the expected weakness in OECD offsets much of the demand growth in non-OECD.

Brent Crude has been ranging mostly above $100 since January 2011. Following a brief sojourn below that area in the summer, prices have bounced back and continue to range above $100. The two-month bias has been downward but prices have rallied back to test the progression of lower highs this month and will need to sustain a move above $116 to suggest a return to demand dominance beyond the short term.

West Texas Intermediate has exhibited a more pronounced downward bias since September but has at least paused in the region of $85. A sustained move above $90 would break the progression of lower rally highs and suggest a return to demand dominance beyond the short term.

The spread between these oil contracts has lost momentum somewhat over the last six weeks but a sustained move below $20 would be required to check Brent's pattern of outperformance.