IEEJ:November 2018 IEEJ2018 Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 10/21 ~ 10/ Imports n.a. n.a. n.a. 1

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1 IEEJ:November 2018 IEEJ2018 Overview November 9, 2018, Friday Released at 14:00 every Friday Publisher: Oil Information Center, Institute of Energy Economics, Japan Inui Bldg. Kachidoki, 11th Floor, 13-1, Kachidoki 1-chome, Chuo-ku, Tokyo, Japan The key WTI (West Texas Intermediate) crude oil futures contract on NYMEX (New York Mercantile Exchange) in the October week moved within a range between $66.43 per barrel and $69.17/bbl. On October 25, the December contract rose further as a sharp U.S. stock market rebound improved investor confidence and induced buying in the crude oil futures market. However, the rise was capped by speculations about Saudi Arabia s possible oil production expansion and concerns about global economic deceleration. The key contract closed at $67.33/bbl, up $0.51/bbl from the previous day. On October 26, the key contract rose for the third straight trading day in response to media reports on China s cut in crude oil imports from Iran and the expected suspension of crude oil transportation from the Kirkuk oilfield in northern Iraq to Iran ahead of the November 5 resumption of oil-related U.S. economic sanctions on Iran. A Baker Hughes report that the number of operating U.S. oil-drilling rigs increased by two from to 875 for the third straight weekly rise had little impact on the market. The December contract gained $0.26/bbl to $67.59/bbl. On October 29, the key contract turned down for the first time in four trading days as selling outpaced buying on the dollar s appreciation against the euro making oil futures prices relatively higher, as well as Russian Energy Minister Alexander Novak s remark that Russia had no reason to cut or freeze oil production, amid the global instability of stock and other financial markets. The December contract lost $0.55/bbl to $67.04/bbl. On October 30, the key contract dropped further despite a U.S. stock market rebound as concerns about global oil supply expansion grew on the United States reported consideration of the fourth tranche of additional tariffs on Chinese imports that could affect the global economy, the reported Saudi Arabian and Russian preparedness to expand oil production and a forecast weekly increase in U.S. crude oil inventories before ly U.S. oil inventory report came the next day. The December contract lost $0.86/bbl to $66.18/bbl. On October 31, the key contract fell for the third straight day to a two-month low as the EIA (Energy Information Administration) reported the sixth straight weekly rise in U.S. crude oil inventories and the dollar s appreciation against the euro made crude oil futures prices relatively higher. The December contract dropped by $0.87/bbl to $65.31/bbl. The Asian benchmark crude oil of Dubai for December delivery on the Tokyo market moved in a range between $75.70/bbl and $78.90/bbl in the October week. It closed at $74.60/bbl on October 25, at $75.10/bbl on October 26, at $76.10/bbl on October 29, at $76.20/bbl on October 30 and at $75.40/bbl on October 31. On the foreign exchange market in the October week, the dollar moved within a range between and yen. It changed hands at yen in late trading on October 25, at yen on October 26, at yen on October 29, at yen on October 30 and at yen on October 31. According to preliminary 10-day trade statistics released by the Ministry of Finance on October 30, the average crude oil import CIF price in the October 1-10 period stood at 54,371 yen/kl (kiloliter), up 1,176 yen/kl from the previous 10-day period. In dollars, the price was $76.78/bbl, up $0.92/bbl. The average exchange rate was yen to the dollar. Major Japanese Motouri (petroleum products wholesalers) cut their wholesale prices by 1.5 yen/l for the fifth week of October for gasoline, diesel oil and kerosene (heating oil). Crude oil acquisition cost fell as crude oil price drops coincided with the yen s slight appreciation against the dollar. Japan s average retail price on October 29 decreased by 0.4 yen/l from for gasoline, by 0.3 yen/l for diesel oil and by 3 yen for kerosene on an 18-liter tank basis. These prices fell for the first time in nine weeks. As crude oil cost decreased in the fourth week of October, all major Motouri companies lowered their wholesale prices by 2.5 yen/l from the previous week for gasoline, diesel oil and kerosene. Crude oil a year Crude oil runs (1,000 kl) 10/21 ~ 10/27 3, ($/b) [NYMEX]WTI crude oil [TOCOM]MiddleEastern crude oil Topper capacity utilization rate (%) Crude oil inventories (1,000 kl) 10/27 13, Middle Eastern crude oil (TOCOM) WTI crude oil (NYMEX) Crude oil import CIF price 1Crude oil import CIF price ($/bbl) 10/ ($/bbl) 10/ ($/bbl) Early Oct (yen/kl) 54,371 1,176 15, Yen-dollar exchange rate (yen/dollar) TTS exchange rate (yen/dollar) 10/

2 IEEJ:November 2018 IEEJ2018 Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 10/21 ~ 10/ Imports n.a. n.a. n.a Shipments Exports Inventories 10/27 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 10/23 ~ 10/ Futures [front-month contract/closing price] Tokyo Bay) 10/23 ~ 10/ / Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 10/ by ANRE) /6 9/4 10/3 10/29 Diesel oil (Unit: 1,000 kl, yen/l) a year Diesel oil (retail) Production 10/21 ~ 10/ Imports n.a. n.a. n.a Shipments Exports Inventories 10/27 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 10/23 ~ 10/ Futures [front-month contract/closing price] Tokyo Bay) 10/23 ~ 10/ / Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 10/ by ANRE) /6 9/4 10/3 10/29 Kerosene (Unit: 1,000 kl, yen/l) a year Kerosene (retail) Production 10/21 ~ 10/ Imports n.a. n.a. n.a Shipments Exports Inventories 10/27 2, Gyoten (spot) [4-district average lorry rack price] (RIM) 10/23 ~ 10/ Futures [front-month contract/closing price] Tokyo Bay) 10/23 ~ 10/ / Chubu) 90.0 Retail prices [weekly (published 10/ by ANRE) /6 9/4 10/3 10/29 2

3 IEEJ:November 2018 IEEJ2018 Relevant Information Overseas crude oil prices 1 On October 31, the most frequently traded crude oil futures contract on NYMEX dropped for the third straight day as concerns about oversupply grew on the sixth straight weekly increase in U.S. crude oil inventories and on reported substantial increases in Russian, Saudi Arabian and U.S. oil production and the dollar s appreciation against the euro made crude oil futures relatively higher. The EIA reported that crude U.S. oil inventories posted ly rise of 3.2 million barrels against a market-forecast increase of 4.1 million barrels, while gasoline and middle distillate inventories logged respective faster-than-expected weekly drops of 3.2 million and 4.1 million barrels. The December contract lost $0.87/bbl to $65.31/bbl. The January contract fell by $0.87/bbl to $65.44/bbl. According to the EIA, the average U.S. retail price of gasoline as of October 29 fell by 3.0 cents per gallon from to $2.811/gal (83.8 yen/l). The average diesel oil price decreased by 2.5 cents/gal to $3.355/gal (100.0 yen/l). The gasoline price dropped for the third straight week, while the diesel price fell for the second consecutive week. 2 Petroleum products supply and demand in Japan (1) Shipments According to ly report by the PAJ (Petroleum Association of Japan), inactive topper capacity in the October week stood at 393,000 barrels per day, down 61,000 bpd from the previous week (total capacity remained at 3,519,000 bpd). Crude oil throughput in the week increased by 210,000 kl from the previous week to 3,133,000 kl. a year, it declined by 39,000 kl. The topper capacity utilization rate stood at 80.0%, up 5.4 points from the previous week and down 1.0 points from a year. Production decreased from the previous week for gasoline and Fuel Oil C and increased for other petroleum products. Output was down 4.8% for gasoline, up 34.7% for jet fuel, up 89.8% for kerosene, up 19.5% for diesel oil, up 2.1% for Fuel Oil A and down 42.5% for Fuel Oil C. Fuel Oil C imports in the week totaled 5,000 kl, up 3,000 kl from the previous week. Diesel oil exports aggregated 91,000 kl, down 40,000 kl. Shipments (excluding imports) in the week decreased from the previous week for jet fuel and Fuel Oil A and increased for other petroleum products. a year, shipments increased for jet fuel and Fuel Oil A and decreased for others. Gasoline shipments increased by 1.9% from the previous week to 853,000 kl for the first rise in three weeks, remaining below 1 million kl for eight weeks on end. Shipments totaled 94,000 kl for jet fuel (down 3.2% from the previous week), 197,000 kl for kerosene (up 143.0%), 647,000 kl for diesel oil (up 3.2%), 186,000 kl for Fuel Oil A (down 4.8%) and 229,000 kl for Fuel Oil C (up 31.0%). Kerosene (heating Oil) Previous week (10/21 ~ 10/27) (10/14 ~ 10/20) Gasoline Jet fuel Diesel oil Fuel oil A Fuel Oil C Total 2,206 2,014 (Unit: 1,000 kl) 16 (2%) -4 (-4%) 116 (143%) 20 (3%) -10 (-5%) 54 (31%) 192 (10%) s shipments = (Previous weekend inventories + s production + s imports) - ( s exports + end inventories) 2 Petroleum products supply and demand in Japan (2) Inventories Inventories as of October 27 decreased from for jet fuel and Fuel Oil C and increased for others. a year, inventories decreased for jet fuel and Fuel Oil C and increased for others. Gasoline inventories totaled 1,649,000 kl, up 47,000 kl from and up 72,000 kl from a year. Kerosene inventories totaled 2,623,000 kl, up 56,000 kl from and up 64,000 kl from a year. Diesel oil inventories totaled 1,461,000 kl, up 28,000 kl from and up 98,000 kl from a year. Fuel Oil A inventories totaled 732,000 kl, up 43,000 kl from and up 42,000 kl from a year. Fuel Oil C inventories totaled 1,999,000 kl, down 107,000 kl from and down 32,000 kl from a year. (10/27) (10/20) Gasoline 1,649 1,602 Jet fuel Kerosene (heating Oil) Previous week 2,623 2,567 Diesel oil 1,461 1,433 Fuel oil A Fuel Oil C 1,999 2,106 (Unit: 1,000 kl) 47 (3%) -68 (-7%) 56 (2%) 28 (2%) 43 (6%) -107 (-5%) Total 9,323 9,324-1 (-0.0%) 3

4 IEEJ:November 2018 IEEJ Petroleum products wholesale prices in Japan (1) Wholesale price revision trend In the October week, crude oil cost apparently posted a sharp fall from the previous week as crude oil prices plunged, with the yen leveling off against the dollar. Onshore cargo spot prices in the week fell and leveled off in a yen/l range for gasoline, in a yen/l range for diesel oil and in a yen/l range for kerosene. Offshore barge spot prices in the week plunged in a yen/l range for gasoline, fell steeply in a yen/l range for diesel oil and nosedived and leveled off in a yen/l range for kerosene. The key futures price in the week fell sharply and rose back slightly in a yen/l range for gasoline, in a yen/l range for diesel oil and in a yen/l range for kerosene. Major Motouri companies cut their wholesale prices by yen/l for gasoline, diesel oil and kerosene. 3 Petroleum products wholesale prices in Japan (2) Spot (Gyoten) and futures price trend Spot petroleum products prices plunged in all markets. The latest onshore cargo spot price (the average onshore rack price for four districts -- Chiba, Kawasaki, Chukyo and Hanshin -- for the October week) that influences Motouri s wholesale prices applied to the first week of November (November 1-7) dropped by 1.3 yen/l for gasoline, by 1.6 yen/l for kerosene and by 1.2 yen/l for diesel oil. The average offshore barge spot price in Tokyo Bay decreased by 2.9 yen/l for gasoline, by 3.1 yen/l for kerosene and by 2.1 yen/l for diesel oil. The key futures price dropped by 5.0 yen/l for gasoline, by 2.5 yen/l for kerosene and by 1.2 yen/l for diesel oil. Crude oil cost fell sharply as crude oil prices plunged, with the yen leveling off against the dollar. For the first week of November, major Motouri companies cut their wholesale prices by yen/l for gasoline, diesel oil and kerosene. Motouri based wholesale price revisions on crude oil and petroleum products market prices and each other s prices from 2010 and have adopted an approach giving greater priority to crude oil acquisition cost since June Spot Futures Price (RIM) [4-district average lorry Previous week rack price] (10/23 ~ 10/29) (10/16 ~ 10/22) Regular Kerosene Diesel oil (TOCOM) [Front-month contract/closing Previous week price] [Average] (10/23 ~ 10/29) (10/16 ~ 10/22) Regular Kerosene Diesel oil Above prices are before tax. Reference (October 23 - October 29 actual data) Products Spot Futures Average Gasoline Kerosene Diesel oil Fuel Oil A Retail prices of petroleum products in Japan (Source) Spot: RIM 4-district average lorry rack price (Chiba, Kawasaki, Chukyo, Hanshin) Futures: TOCOM average offshore barge spot price for Keihin District The average retail service station price as of October 29 dropped by 0.4 yen/l from to yen/l for gasoline, by 0.3 yen/l to yen/l for diesel oil and by 0.1 yen/l to 99.7 yen/l for kerosene (on an 18-liter tank basis, the kerosene price decreased by 3 yen to 1,794 yen). These prices fell for the first time in nine weeks. Gasoline prices increased in nine of Japan s 47 prefectures, remained unchanged in six and decreased in 32. The lowest gasoline price among the prefectures was yen/l in Saitama Prefecture (down 0.2 yen/l from ). The second lowest was yen/l in Chiba (down 0.1 yen/l). The highest price was yen/l in Nagasaki (down 0.3 yen/l). Posting the largest price hike of 1.2 yen/l was Wakayama (158.3 yen/l). leveled off in Shiga, Kagawa, Kochi, Aomori, Nara and Miyagi. Logging the sharpest price cut of 1.9 yen was Aichi (156.7 yen/l). As crude oil cost declined substantially last week, major Motouri companies cut their wholesale prices by yen/l from the previous week for gasoline, diesel oil and kerosene. Crude oil cost dropped steeply this week as crude oil prices plunged, with the yen leveling off against the dollar. Retail gasoline and kerosene prices are expected to fall next week (as of November 5). (Published by ANRE)[Weekly Previous week (10/29) (10/22) Latest high Retail Price Regular /8/ Kerosene /8/ Diesel oil /8/ Nationwide average cash retail price (including consumption tax) Since April 2007, 2,000 service stations have been covered. Latest highs are highest levels since October

5 IEEJ:November 2018 IEEJ2018 Gasoline price trend (2018/8/20 ~ 2018/10/29) ( /L ) 90.0 Left scale: retail prices Retail price RIM (offshore barge) RIM (onshore) TOCOM/ futures, Chubu TOCOM/ futures, Tokyo Bay Right scale: RIM and futures prices /20 8/27 9/3 9/10 9/18 9/25 10/1 10/9 10/15 10/22 10/29 Retail price RIM (offshore barge) TOCOM ( futures, Tokyo Bay) TOCOM ( futures price, Chubu) RIM (onshore) (Note) 1 Retail price includes consumption Tax, RIM, TOCOM prices are before tax. 2 RIM (onshore) is the aberage of four district. 5

6 IEEJ:November 2018 IEEJ2018 Announcement This report is available at the center s website ( The next issue (No. 30 for 2018) will be announced at 14:00 on November 16. On use of this report The copyrights to texts, graphics and other information (hereinafter combined into documents ) in this report belong to the Oil Information Center of the Institute of Energy Economics, Japan (hereinafter referred to as this Center), or to third parties contributing the documents to this Center. This Center forbids the documents from being repurposed, duplicated or altered without approval by this Center. This Center has made the documents comprehensive but no guarantee is made as to accuracy or safety. Weekly Oil Market Review In an interim report compiled in May 2004 by a petroleum products market trend study panel sponsored by the Petroleum Distribution and Retail Division of the Natural Resources and Fuel Department at the Agency for Natural Resources and Energy, the panel stated, We hope that the Japanese oil industry will solidify its market and price-finding functions and that the oil industry as a mainstay industry in Japan will further enhance its rationality and vitality over a medium term as industry people deepen their understanding of the need for rational price recognition based on market and price-finding functions to be established in the oil industry and for business decisions based on recognition under the principle of self-responsibility. In response to the report, this Center has published the Weekly Oil Market Review as a tool for oil-related people, business administrators (particularly service station managers) and ordinary consumers to accurately understand crude oil and petroleum products supply and demand and price trends, in cooperation with relevant organizations such as the Petroleum Association of Japan and the Zensekiren (Japan s Dealers Association) since May Sources of data provided in this report 1 [Crude oil and petroleum products supply and demand] (weekly PAJ report) Data in weekly statistics on crude oil and petroleum product supply by the Petroleum Association of Japan are calculated in terms of 1,000 kiloliters. Shipments are estimated by this Center. 2 [Crude oil and futures prices] (WTI crude and Middle Eastern crude) For the WTI crude, the front-month WTI crude futures contract s daily closing price on the New York Mercantile Exchange (NYMEX) is adopted. For the Middle Eastern crude, the front-month Middle Eastern crude futures contract s closing price on the Tokyo Commodity Exchange (TOCOM) is adopted. * Secondmonth (next-month) contract Underlying the Middle Eastern crude price is the average price for the Dubai and Oman crude oil. The telegraphic transfer middle rate (TTM) released by the Bank of Tokyo- Mitsubishi UFJ is adopted as the foreign exchange rate. The crude oil import CIF price is a dollar-denominated reference price estimated by the PAJ based on the average crude oil price (on a 10-day basis) in the Ministry of Finance trade statistics. 3[Motouri wholesale prices of petroleum products in Japan] Motouri wholesale prices are prices for transactions between Motouri petroleum products wholesalers (primary wholesalers) and their affiliates (secondary wholesalers). Motouri companies modified their new pricing system in April 2010 to decide specific policies in comprehensive consideration of crude oil and petroleum products market prices, each other s prices and other data. In June 2014, they modified the system further to give greater priority to crude oil cost. 4 [Gyoten spot prices of petroleum products in Japan] (RIM gyoten) Onshore cargo spot prices are the average onshore lorry rack prices for the four districts of Tokyo, Kawasaki, Chukyo and Hanshin in the Lorry Rack Report of RIM Intelligence Co. 5 [Futures prices of petroleum products in Japan] (TOCOM) Front-month petroleum products futures contracts daily closing prices for TOCOM Tokyo Bay and Chubu are adopted. TOCOM Tokyo Bay prices are the average offshore barge prices for the Keihin district. TOCOM Chubu prices are the average lorry rack prices in the Chubu district. 6 [Retail prices of petroleum products in Japan] (Weekly trend survey) Average cash retail prices at some 2,000 service stations subject to ly nationwide survey are adopted (as released by the Agency for Natural Resources and Energy). The survey covers prices on Monday and is released at 14:00 on Wednesday (available on the website of the Agency for Natural Resources and Energy). 6 Contact :report@tky.ieej.o

Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 5/20 ~ 5/ Imports n.a. n.a. n.a. Shipments

Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 5/20 ~ 5/ Imports n.a. n.a. n.a. Shipments Overview June 8, 2018, Friday Released at 14:00 every Friday Publisher: Oil Information Center, Institute of Energy Economics, Japan Inui Bldg. Kachidoki, 11th Floor, 13-1, Kachidoki 1-chome, Chuo-ku,