Outlook For Energy Markets - New York Energy …

1 K. Spector - January 20141 Katherine SpectorHead of Commodities StrategyCIBC World For Energy MarketsJanuary 2014K. Spector - January 201421. Global Crude: Supply could surprise in either direction, but when sthe last time a failed state surprised us in the good way?Supply outages still rule the oil balance. The Call on OPEC may be falling,but the Call on Saudi isn t at least not yet. A range of scenarios in fourkey hotspots Iran, Iraq, Libya, and Nigeria is how we frame our viewsfor global North American Oil: Time to focus on PADD 3As the light crude bottleneck moves south, we also start to think aboutheavy crude market share, and potential constraints on US Gulf refinedproduct Natural gas: Don t let the weather fool you!

2 North American gas fundamentals are still structurally bearish. Ultimatelyit will be demand not supply that rations this market Themes In Today s Energy MarketsK. Spector - January 20143US + Gulf-3 Bail market OPECmbdCIBC Commodities Strategy, IEA, Petrologistics, gov nt sourcesRest of Non-OPECUSS audi +Kuwait +UAERest of OPECS upply Chg, 2013 vs 2010K. Spector - January 20144 Unplanned Oil Supply Outages Pile Up05001,0001,5002,0002,5003,0003,500 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Non-OPEC TotalOPEC TotalkbdCIBC Commodities Strategy, EIAK. Spector - January 20145 Call On Saudi Crude vs Actual Saudi '11 Jan'12 Jan'13 Jan'14 Jan'15mbdMarket Call on Saudi Crude (3-mo.)

3 Rolling avg)Actual Saudi Crude ProductionCIBC Commodities Strategy, IEA, Petrologistics, gov nt sourcesK. Spector - January 20146 Saudi Surplus/Deficit vs Observed Stock Chg. In Commerical Stocks(OECD+China+Saudi)Saudi Production Minus Saudi Call (3-mo. rolling avg)SPR ReleaseCIBC Commodities Strategy, IEA, Petrologistics, gov nt sourcesK. Spector - January 20147 Call On Saudi '00'01'02'03'04'05'06'07'08'09'10'11'12' 13'14'15mbdOptimistic Supply ScenarioPessimistic Supply ScenarioBaseline Supply ScenarioCIBC Commodities Strategy, IEA, Petrologistics, gov nt sourcesSaudi Comfort Spector - January 20148262728293031323334353637'91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 Refinery RunsImportsDomestic ProductionUS Crude Production / Import Quality '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 Production Gets Lighter, Imports HeavierProduction Gets Sweeter.

4 Imports More SourVolume Weighted Average API GravityCIBC Commodities Strategy, EIACIBC Commodities Strategy, EIAV olume Weighted Average Sulphur ContentK. Spector - January 20149 market Share By Country Of Origin0%5%10%15%20%25%30%35%LightsOther HvyVZMexicoCanadaSaudi20102013 market Share of US Crude Imports By OriginCIBC Commodities Strategy, EIA0%5%10%15%20%25%30%35%LightsOther HvyVZMexicoCanadaSaudi20102013 market Share of PADD 3 Crude Imports By OriginK. Spector - January 201410 Hypothetical market Share At Play At Saudi JVs2351801872262703540100200300400500600 700800200820092010201120122013kbdCrude imports to Saudi to Motiva JVsCrude imports to Saudi JVs from other countriesCIBC Commodities Strategy, EIAK.

5 Spector - January 201411 Gross PADD 3 Imports + Exports010002000300040005000600070008000 9000'81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13kbdTotal OilCrudeNon-Crude LiquidsCIBC Commodities Strategy, EIAK. Spector - January 201412 CIBC Commodities StrategyLong-dated WTI Spreads Outpace Flat Price$/bbl$20$40$60$80$100$120$140$160'0 9'10'11'12'13'14$(15)$(10)$(5)$-$5$10$15 Mth 1 WTI (left)Mth 6 - Mth 24 Spread (right)K. Spector - January 2014133. North American Natural GasNot Out of the WoodsK. Spector - January 201414 Natural Gas Competes With CAPP CoalCIBC Commodities StrategyCompeting Fuels - Past 12 Months$ $ $ $ $ $ $ $ $ $/MMBtuCCGT: PRB Coal Efficiency BandCCGT: CAPP Coal Efficiency BandNYMEX Henry HubK.

6 Spector - January 201415010,00020,00030,00040,00050,00060, 000'10'11'12'13'14'15'16'17'18'19'20'21' 22'23'24'25 MWAs of Jan'14As of Jan'13As of Jan'12As of Jan'11 CIBC Commodities Strategy, EIA, Company reportsEvolution of Coal Generation Retirement ScheduleK. Spector - January 201416-2-1012345678200020022004200620082 0102012 Michigan / MinnesotaNew England / New YorkVolumes on TRP MainlineTotal NetBcf/dCIBC Commodities Strategy, EIANet East of Mississippi US Imports Of CAD GasK. Spector - January 201417 CIBC Commodities Strategy, PetrologisticsBest, Base, Worse Case Supply '09'10'11'12'13'14'15mbdPessimisticOptim isticBaseIranian Crude '09'10'11'12'13'14'15mbdIraqi Crude '09'10'11'12'13'14'15mbdLibyan Crude '09'10'11'12'13'14'15mbdNigerian Crude ProductionK.

7 Spector - January 201418 This communication, including any attachment(s), is confidential and has been prepared by the Macro Strategy Desk within the Fixed Income, Currencies and Commodities Group at CIBC World Markets Inc., wholly-owned subsidiary and wholesale banking arm of Canadian Imperial Bank of Commerce. The contents of this communication are based on macro and issuer-specific analysis, issuer news, market events and generalinstitutional desk discussion. The author(s) of this communication is not a Research Analyst and this communication is not the product of any CIBC World Markets Inc.

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10 Or its affiliates may engage in trading strategies or hold positions in the issuers,securities, commodities, currencies or other financial instruments discussed in this communication and may abandon such trading strategies or unwind such positions at any time without communication,including any attachment(s), is confidential and has been prepared by the Macro Strategy Desk within the Fixed Income, Currencies and Commodities Group at CIBC World Markets Inc., wholly-owned subsidiary andwholesale banking arm of Canadian Imperial Bank of Commerce.