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 . mic