Argus US West Coast Products

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1 Market Summary Market Prices Los Angeles gasoline markets fell amid growing inventories and stronger refinery runs. The forward curve maintained in contango, as first-quarter refinery maintenance is set to tighten supplies. Los Angeles diesel and jet fuel markets fell amid pressure from rising inventories. Upcoming refinery maintenance kept the forward curve in carry. West coast ethanol prices continued to decline Wednesday as overwhelmingly bearish data from the US Energy Information Administration (EIA) kept pressure on an already downward trending market. Key petroleum prices Price ± Los Angeles Carbob Los Angeles Carb diesel Los Angeles jet fuel ANS delivered USWC $/bl South Korea to USWC freight rate Key renewables prices /RIN Vintage Price ± Los Angeles low CI ethanol Renewable fuel (ethanol) RIN Advanced biofuel RIN Biomass-based diesel RIN RVO Key California carbon prices Contents Gasoline 2 Distillates 2 Renewables 3 California carbon 4 Fuel oil 4 News 4 Vintage Price ± Credits California carbon allowances (CCA) carbon fuel standard (LCFS), 5 Dec Price per gallon CCA price for regular Carbob CCA price for ULSD LCFS price for regular Carbob, 5 Dec LCFS price for ULSD, 5 Dec San Francisco Carbob vs LA Carbob price CCA price for regular Carbob hhh Sep 14 9 Oct 14 7 Nov Dec Sep Oct Nov Dec 14 Copyright 2014 Argus Media Ltd

2 RINs /RIN Renewable fuel (ethanol) Biomass-based diesel Cellulosic biofuel Advanced biofuel Renewable Volume Obligation (RVO) West Gasoline coast Los Angeles gasoline markets fell amid growing inventories and stronger refinery runs. The forward curve maintained in contango, as first-quarter refinery maintenance is set to tighten supplies. A lack of tenders for pipeline space suggested refineries were running without glitch, adding to bearish demand. Trading focused on the forward month. January CARBOB traded at February Nymex -7.5 and -8, down from Tuesday s range between -5.5 and December barrels were talked from January Nymex -15 and -13 / USG, down 4 from Tuesday s midpoint. Total gasoline stocks in PADD 5 rose by 5.3pc to 30mn bl during the week ended 5 December. West coat run rates also rose from 87.5pc to 91.5pc during the week. San Francisco CARBOB was thinly talked on Wednesday. December barrels were notionally pegged at January Nymex -20, down by 2.5 from Tuesday. Portland gasoline fell along with the California markets. Prompt sub-octane was heard done at January Nymex / USG and -20 /US, down by 0.5 from the previous session. West Distillates coast Los Angeles diesel and jet fuel markets fell amid pressure from rising inventories. Upcoming refinery maintenance kept the forward curve in carry. CARB diesel in LA traded at January Nymex -14 and -13, down by 4.5 from Tuesday s market. EPA diesel maintained a 3.5 discount to CARB diesel, trading at -17 for December delivery. Los Angeles gasoline 84 Carbob Dec Jan Carbob Jan Feb Carbob Dec sub-octane Dec Jan Azbob Dec Azbob Dec Ethanol low CI Los Angeles distillate Carb ULSD Dec Jan EPA ULSD Dec Jan Jet fuel Dec Jan San Francisco gasoline 84 Carbob Dec Jan Carbob Dec San Francisco distillate Carb ULSD Dec Jan EPA ULSD Dec Jan Jet fuel Dec Jan Portland gasoline 84 suboctane Dec Jan Portland distillate ULSD Dec Jan LA ethanol vs Chicago ethanol Chicago = 0 hhh 10 Sep 14 9 Oct 14 7 Nov Dec 14 Copyright 2014 Argus Media Ltd Page 2 of 6

3 San Francisco vs LA Carb diesel price hhh California carbon allowances (CCA) Vintage ivery Bid Ask Price ± 2014 Dec Dec Dec CCA volume-weighted averages Vintage ivery VWA MTD 2014 Dec Vintage ivery Trades MTD Volume MTD Sep 14 9 Oct 14 7 Nov Dec 14 Los Angeles December jet changed hands at January Nymex -13 and -11, down by more than 3 from Tuesday. January barrels traded at February Nymex -7. Total west coast distillates stocks rose 4.8pc to 13.2mn bl during the week ended 5 December, latest data from the Energy Information Administration showed. Renewables West coast ethanol prices continued to decline Wednesday as overwhelmingly bearish data from the US Energy Information Administration (EIA) kept pressure on an already downward trending market. All US rail markets were once again strongly affected, declining between 11 and 21 below the previous day s levels depending on location. Prompt valuations in the Chicago Argo in-tank transfer and New York Harbor barge markets managed to post gains, bifurcating from railed material. On the US west coast, Northern California (Norcal) railcars shipping this week transacted at the $2.06/USG level, 17 below the previous day and its lowest level since 4 November. San Diego railcars transacted at close levels with Norcal, with volume changing hands at $2.07/USG. RIN markets shot higher Wednesday, halting a four-day decline, with current year ethanol and biodiesel credits adding between 3 and 3.75 /RIN in day-over-day comparison. Compliance costs as measured by the Argus Renewable Volume Obligation (RVO) rose by 0.33 to stand at 5.65, its highest level since 24 September, Heavy volumes traded during the session, with more than 40mn 2014 vintage ethanol credits changing hands and nearly 53mn across all D-codes Dec ,000 1,335,000 CCA price for gasoline, diesel 24 Sep ± Aug index ± California regular Carbob California midgrade Carbob California premium Carbob California distillate ULSD CO2 California carbon offsets, 19 Sep Bid Ask Price ± Seller-guaranteed year invalidation California low-carbon fuel standard (LCFS) credits, 19 Sep Vintage Bid Ask Price ± VWA Trades Volume MTD , Month index, 29 Aug 25 California LCFS cost for gasoline, diesel, 5 Dec Avg Fuel Price ± Carbob 0.34 Ultra low-sulfur diesel LCFS premium per carbon intensity point, 5 Dec Ethanol 0.21 Biodiesel 0.33 Price ± The 2014 vintage D6 ethanol credits transacted between 60 and 62.5 /RIN, with trades occurring at the 61 /RIN level out of the gates and levels steadily rose to 62.5 /RIN near midday before backsliding to the 60 /RIN level. Similarly, current year D4 biodiesel RINs changed hands between 62 and 63 /RIN as the credits trekked higher, contracting the D4/D6 spread to just 1.25 /RIN. The 2015 vintage RINs were more active than in previ- Copyright 2014 Argus Media Ltd Page 3 of 6

4 ous sessions this week. Ethanol credits traded to either side of 60 /RIN, while the D4 biodiesel RINs of the same vintage transacted at the 66 /RIN. California carbon California Carbon Allowance (CCA) trading picked up in activity that left prices mixed. A total of just over 3.1mn metric tonnes traded in 10 deals that lifted prices for vintage 2014 CCAs and pulled down the vintage 2015 allowances. Vintage 2014 CCAs for December delivery traded four times for a total of 351,000t, raising the price of the contract to $12.35/t, 2 higher than yesterday. The 2015 CCAs for December 2015 delivery traded twice at $12.80/t. These deals, which totaled 200,000t, were priced 3 lower than yesterday. Vintage 2017 CCAs also went twice for 900,000t for each deal and vintage 2016 traded twice in deals for 75,000t. The California Air Resources Board (ARB) today issued nearly 143,000 offset credits to two projects. The board issued nearly all of the credits to an Ohio ozone-depleting-substances project from Reclamation Technologies. The remaining credits, nearly 13,000, were for a new reporting period for an existing livestock project, the Brook View dairy methane reduction project. -Carbon Fuel Standard (LCFS) credit transfer volumes declined markedly in November, ARB said yesterday in its monthly LCFS report. A total of 61,000 tonnes of credits moved in the agency s credit tracking system last month, down from 207,000t in October and 296,000t in September. Fuel oil Bunker fuel prices declined on the US west coast on Wednesday as a slowdown in demand in Seattle combined with further losses in the crude complex. One Seattle supplier noted that demand in Seattle and Tacoma has slowed down because of labor dispute between the longshoremen working at the port and the port associations, which is slowing down cargo operations. One supplier was tight low-sulphur 380cst in Vancouver. -sulphur was indicated at $408/t and MGO at $860/t ex-wharf Vancouver. Stormy weather could delay bunkering in San Francisco and Oakland, California on Thursday. News Tesoro sees Calif economy, gasoline demand up Improving California gasoline demand has perked up prospects for refiners and fuel retailers in a state notoriously icult for Nymex futures New York Rbob New York heating oil Light sweet crude $/bl Crude Settle ± Crack spread Jan Feb Mar Jan Feb Mar Jan Feb Mar $/bl ANS del USWC Feb Feb San Joaquin light Jan Pstg Line 63 Jan Pstg Midway Sunset Jan Pstg Avg Light postings average Heavy postings average Bunkers 180cst 380cst Los Angeles Portland Seattle Freight rates Origin Destination Rate $mn Singapore US west coast South Korea US west coast Asia-Pacific Chile US west coast Chile ,000t clean tankers, lump sum in $ the industry, according to Tesoro, California's largest refiner by market share. US independent Tesoro, which operates more than 28pc of the state's refining capacity, noted the uptick in a presentation to analysts yesterday. Tesoro executive vice president of operations Keith Casey said a US Census Bureau-estimate of 1pc population growth and rising vehicle miles should help tighten the state fuels market. "Within the west coast, the Golden State is regaining its luster," Casey said. "As that demand continues to pick up inter- Copyright 2014 Argus Media Ltd Page 4 of 6

5 US west coast clean products deals done Timing Price Volume 000 bl RINs deals done Market Timing Price /RIN Volume 000 RINs LA 84 Carbob Jan Feb Jan Feb LA jet Jan Feb Dec Jan Dec Jan LA Carb ULSD Dec Jan Dec Jan LA EPA diesel Dec Jan California carbon deals done Date Type Transaction Vintage Volume t Price $ 10 Dec 14 CCA (ICE) Future (Dec 14) , Dec 14 CCA (ICE) Future (Dec 14) , Dec-14 CCA (ICE) Future (Dec 15) , Dec-14 CCA (ICE) Future (Dec 14) , Dec-14 CCA (ICE) Future (Dec 14) , Dec-14 CCA (ICE) Future (Dec 15) , Dec-14 CCA (ICE) Future (Dec 15) , Dec 14 CCA (ICE) Future (Dec 14) , Dec 14 CCA (ICE) Future (Dec 14) , Dec 14 CCA (ICE) Future (Jan 15) , nally in California, it has the ability to soak up any export need in the market." There are other signs on growing fuel demand in California. Vehicle miles traveled in the state through the first 11 months of the year reached 170.5bn miles, an all-time high for the period, according to the California Department of Transportation. Drivers are outpacing the current high of 182.7bn miles set in 2007, when retail gasoline prices averaged 74 less. California lagged other states in recovering from the recession that began in Unemployment remains above 7pc, still high but falling through 2014 closer to the national 5.8pc unemployment rate, according to the US Bureau of Labor Statistics. The state still challenges US refiners. Comparatively steep regulatory hurdles continue to stall refiner efforts to produce fuels from cheaper, more profitable crudes. Phillips 66, another US independent refining in the state, declined to comment on gasoline demand but noted state fees tied to emissions regulations will increase the cost of transportation fuels beginning in January. Those costs could be as much as 20 / USG in 2020, according to state studies. Tesoro has bet heavily on California, a state that has a Biodiesel Ethanol regulatory policy of drastically reducing gasoline and diesel consumption by The US independent refiner edged out Chevron and ExxonMobil for refining market share last year with the purchase of BP's California operations. Tesoro operates nearly two thirds of its refining capacity in California. US crude stocks rose by 1.5mn bl: EIA US crude inventories gained by 1.5mn bl last week to 380.8mn bl, according to the Energy Information Administration (EIA). Imports climbed 5pc, or 365,000 b/d to 7.7mm b/d last week, while production gained by 35,000 b/d to 9.1mn b/d. Refinery run rates rose by 2 percentage points to 95.4pc of capacity, sending throughputs higher by 271,000 b/d to 16.6mn b/d. Crude inventories had been expected to show a decline of Copyright 2014 Argus Media Ltd Page 5 of 6

6 3mn bl, while refinery run rates had been expected to climb by 0.3 percentage points, according to an Argus survey. Inventories in the pipeline and storage hub of Cushing, Oklahoma, rose by 1mn bl to 24.9mn bl. Gasoline stocks gained by 8.2mn bl to 216.8mn bl, compared to expectations of a 2.7mn bl gain. Distillate inventories rose by 5.6mn bl to 121.8mn bl, compared to expectations for a 1.6mn bl gain. 7th Argus Americas Crude Summit January 27-29, 2015 Houston, Texas Join crude market participants at the strategy meeting of the year. Featuring Keynote speakers Newt Gingrich and Joe Gorder, CEO & President, Valero Energy Corporation. Register early and save! Petroleum illuminating the markets Market Reporting Consulting Events Argus US West Coast Products is published by Argus Media Ltd. Registered office Argus House, 175 St John St, London, EC1V 4LW Tel: Fax: sales@argusmedia.com ISSN: copyright notice Copyright 2014 Argus Media Inc. All rights reserved. All intellectual property rights in this publication and the information published herein are the exclusive property of Argus and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this publication you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, ARGUS US WEST COAST, other ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd. Visit for more information. Disclaimer The data and other information published herein (the Data ) are provided on an as is. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law. Publisher Adrian Binks Chief operating officer Neil Bradford ceo americas Euan Craik Global compliance officer Jeffrey Amos commercial manager Karen Johnson editor in chief Ian Bourne Managing editor, Global Cindy Galvin Managing editor, americasl Jim Kennett editor David Ruisard Tel: uswestcoastproducts@argusmedia.com customer support and sales Technical queries technicalsupport@argusmedia.com All other queries support@argusmedia.com Houston, us Tel: New york. us Tel: Washington Dc, us Tel: London, uk Tel: astana, kazakhstan Tel: Beijing Tel: Dubai Tel: Moscow, russia Tel: rio de Janeiro, Brazil Tel: Singapore Tel: tokyo, Japan Tel: Petroleum illuminating the markets