CERI Commodity Report Crude Oil

Transcription

1 CERI Commodity Report Crude Oil December 2012-January 2013 Top Five Canadian Energy Stories of 2012 Keeping on top of the news that is generated every day by the oil and gas industry is not an easy task. The year 2012 lacked a top-hit energy story like the Deepwater Horizon oil spill in 2010 or the Fukushima Daiichi nuclear disaster of According to Associated Press polling, the slow economic recovery came up as the year s top story, which is not hard to believe as 2012 was another year of the ongoing European financial crisis as well as continuing lack of cooperation by US politicians over the government debt, which threatens to destabilize the world's largest economy. The Canadian economy performed better than most economies, but not without its hiccups. The threat of "Dutch Disease" produced by Alberta's expanding oil industry pushing up the loonie and undermining the economy in the East was a persistent and highly political story for much of the year. The theory was quickly disproved by many, including Bank of Canada Governor Mark Carney. So it is no surprise that energy issues were the big story in Canada in 2012 and these were the top five. 1. CNOOC-Nexen Takeover China has long held ambitions with respect to North American resources. In 2005, China National Offshore Oil Corporation Limited (CNOOC) made a takeover bid for US -based Unocal, which was the ninth largest US energy company. The bid ran into serious political opposition, and was ultimately withdrawn. In 2012, CNOOC made a successful $15.1 billion bid to take over Canadian oil company Nexen. After repeated delays, Prime Minister CERI Commodity Report Crude Oil Editor-in-Chief: Dinara Millington (dmillington@ceri.ca) About CERI The Canadian Energy Research Institute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in Our mission is to provide relevant, independent, objective economic research in energy and related environmental issues. We strive to build bridges between scholarship and policy, combining the insights of scientific research, economic analysis, and practical experience. In doing so, we broaden the knowledge of young researchers in areas related to energy, the economy, and the environment while honing their expertise in a range of analytical techniques. For more information about CERI, please visit our website at Stephen Harper approved the CNOOC-Nexen deal and a $5-billion takeover of Progress Energy by Malaysian state -owned enterprise (SOE) Petronas while cautioning there would be no more take-overs in the oil sands. 1 Harper said foreign-state control of oil sands development in particular has reached the point where further control would not be beneficial to Canada. The deal is the largest -ever acquisition by a Chinese company, and gives China a more active presence in Canada s oil sands. (China has already made investments totaling nearly $3 billion in Canada.) The deal prompted a wave of economic nationalism as polls suggested more than 70 percent of Canadians oppose state-run foreign corporations controlling Canada's natural resources. The company is still awaiting US approval over its purchase of Nexen assets in the Gulf of Mexico and UK approval over the North Sea assets that Nexen held. The Alberta government provided Ottawa a list of conditions it wanted attached to any federal approval of the CNOOC -Nexen transaction. Those conditions reportedly included guarantees that at least half of Nexen s board and management positions would be held by Canadians; for CNOOC to maintain current staffing levels for at least five years; and a commitment to maintain planned capital spending. In a news release, CNOOC said it will seek to retain Nexen s current management team and employees, and invest significant capital on oil and gas resources in Canada. CNOOC has also promised to make Calgary its North and Central American headquarters and to list CNOOC shares on the Toronto Stock Exchange Pipeline Oppositions 2012 was also a year of campaigns by environmental and other groups against the development of the oil sands, which transformed into continental protests against carriers of oil sands bitumen, in other words, pipelines. This created far-reaching challenges for the proposed Northern Gateway and Trans-Mountain oil pipeline s expansion projects in British Columbia and the Keystone XL in Nebraska and Texas. Public hearings in British Columbia and Alberta over Enbridge's $5.5-billion Northern Gateway project provided the venue for a year of protests in Canada. This hearing had over 4,000 registered participants to speak at the hearing. Relevant Independent Objective

2 Page 2 Meanwhile, the White House is delaying its decision again over TransCanada s Keystone XL on the re-routed $7-billion pipeline until the first half of Canada's oil industry has a major challenge in that it needs new markets for its crude oil, but getting to those markets is more difficult than ever. In December, TD Economics said pipeline expansion in Canada must be "a national priority" or it will seriously challenge the longterm growth of the oil industry. 3. Differential Issues Prior to the shale and tight oil boom in the US and significant expansion of oil sands in Canada, the US and Canadian system for delivering crude oil to market was stable and relatively predictable. In general, the US and Canadian crude oil pipeline networks were originally designed for taking crude oil into the US Midwest. Then matters started to change as production started to rise, increasing the Cushing inventories, and pricing for WTI at the Cushing, Oklahoma hub, which had always run in close parity with Brent, started to disconnect. Discounts deepened, affecting essentially all inland Lower-48 crude grades, as well as Canadian crude oils (since these are also priced off WTI). Since January 2011, these discounts have been steep and have been considered structural. 3 This year was the second consecutive year when Canadian oil and oil sands producers were faced with this on-going problem of large discounts to global and domestic crude prices. Rapid growth in the oil sands supply and a surge in US tight oil production translated into a double discount on Western Canadian oil from the top global prices. Simply put, benchmark West Texas Intermediate (WTI) crude trades at a discount to North Sea Brent (i.e., global benchmark) and Canadian heavy, represented by the Western Canadian Select (WCS), sells at a discount to WTI. In December of 2012, the WTI-WCS spread reached a record $40 per barrel and is estimated to cost Canadian producers, provincial and federal governments billions of dollars per year. 4. LNG Plans Amid the vigorous debate over oil pipelines and super tankers off the B.C. coast there has been remarkably little public opposition and significant Aboriginal support for the development of liquefied natural gas (LNG) export facilities at Prince Rupert and Kitimat. There are at least eight projects on the drawing board with Petronas, Shell and now Chevron taking key roles in some of the most advanced projects. There could be significant LNG exports from Canada by late in this decade. Low continental prices and an abundance of natural gas have generated interest both publically and privately to look into exporting LNG. Of particular interest are the Asian markets where North American exporters hope to arbitrage high Asian prices against low continental prices. However, North American LNG exporters are not alone in trying to access the Asian gas premium. Australia has committed to considerable LNG export capacities and other gas producing countries are following suit. Concurrently, the abundance of continental gas supplies has increased domestic natural gas end-user demand within the utility, petrochemical, industrial and transportation sectors as well as sparked a debate on whether the United States should export large amounts of LNG. Thus, exporting LNG has significant challenges and North American exporters face considerable risks. With multiple pressures facing the North American LNG industry, many have been wondering if the window of opportunity for North American exports has vanished. The new CERI Study Global LNG: Now, Never, or Later? summarizes current regasification and liquefaction capacities, explains LNG pricing, and reviews some of the risks for North American LNG exporters. 4 The study concludes with addressing the question of whether there is room for North American LNG exporters in an Asian- Pacific market. 5. Cumulative Effects of the Oil Sands Industry The new era of oil sands development in Alberta began in the mid-1990s. Due in part to lower production costs and higher oil prices, a record number of applications were made for new projects and for the expansion of existing oil sands operations in the region. This development resulted in questions about the ability of the environment to handle the level of projected growth and development in oil sands extraction and upgrading. It also resulted in increased stakeholder concern over the potential combined or cumulative effects that increased levels of industrial activity could have on the environment on the land, water, and air. Cumulative environmental impacts could potentially affect environmental quality, biological diversity, and/or human health, resulting in habitat loss, wildlife loss, and a reduction in air and water quality. Since the first commercial oil sands production, Alberta delivered the Lower Athabasca Regional Plan to oversee development of this resource that produces close to 2 million barrels

3 Page 3 of oil a day. The issue of the cumulative effects from oil sands development was raised for the first time in 2012 as part of an environmental review for Shell's Jackpine mine expansion. 5 Alberta had implemented changes to the provincial regulator by aligning its energy and environment ministries with the renamed Alberta Energy Regulator to improve oversight. As well, the industry announced the establishment of the Canadian Oil Sands Innovation Alliance (COSIA) on technology development and commercialization to address environmental issues. Shell announced it would proceed with its Quest Carbon Capture and Storage project to offset some of the greenhouse gas emissions generated from its oil sands operations. Along with these stories, there were some other notable ones, including a continuing pursuit of a National Energy Strategy by Alberta s Premier; a well blowout near Innisfail that spilled 500 barrels of oil and water during a fracking job; approval of two north-south power lines in the Edmonton-Calgary corridor; and a wave of CEO departures, such as Rick George at Suncor Energy, John Manzoni at Talisman Energy, Pat Daniel at Enbridge and Mike Graham at Encana. Endnotes 1 The federal government released an updated foreign investment framework that establishes new rules for stateowned enterprises (SOEs) and serves notice that foreign takeovers of Canadian oil sands companies won t be permitted going forward, except on an exceptional basis only To read more on differentials, see CERI Commodity Report- Crude Oil, November CERI Study No The study can be downloaded from 5 Calgary Herald. Ewart: Cumulative effects of oilsands development prominent as Jackpine hearing opens Ewart+Cumulative+effects+oilsands+development+prominent+ Jackpine+hearing+opens/ /story.html#ixzz2KEShOXeM Ewart+Cumulative+effects+oilsands+development+prominent+ Jackpine+hearing+opens/ /story.html

4 Page 4 US$/bbl Spot Crude Prices Differential WTI Brent US$/bbl US$/bbl WTI - Edmonton Light Price Differentials Differential WTI Edmonton Light Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Spot Prices WTI Brent Edm.Light H.Hardisty Year-to-Date Quarter-to-Date January 29, SOURCE: EIA. SOURCE: EIA. US$/bbl WTI - Hardisty Heavy Price Differentials Differential WTI Hardisty Heavy US$/bbl NYMEX Crude Forward Curve 12 months Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec Nov Dec Jan SOURCE: NRCan, EIA. SOURCE: EIA, CERI.

5 SOURCE: EIA, CERI. SOURCE: NRCan. Page 5 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal 4.00 CDN/US$ RBOB Gasoline Heating Oil Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date January 29, Oil Demand Global in Selected Oil Demand Countries US Products Demand December December 2012 Y-on-Y change MMbpd % % 30% 90 20% 80 50% 70 10% % 48% 0% -10% 30-20% % 46% 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13-30% -40% Total Gasoline Jet Fuel Distillate Residual Propane Other OECD Demand non-oecd Demand non-oecd Share of Global Demand SOURCE: IEA Oil Market Report. SOURCE: EIA Weekly Petroleum Status Report. Relevant Independent Objective

6 SOURCE: IEA Oil Market Report, CERI. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. Page 6 Global Oil Supply MMbpd Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 non-opec Supply OPEC Supply non-opec Share of Global Supply Canadian Oil Production by product Mbpd 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Q12 4Q12 1Q13 2Q13 3Q13 AB L/M/H AB Bitumen SK Other NGLs Synthetic 61.0% 60.5% 60.0% 59.5% 59.0% 58.5% 58.0% 57.5% 57.0% Mbpd 12,000 10,000 8,000 6,000 4,000 2,000 0 Mbpd 3,000 2,500 2,000 1,500 1, US Oil Production by region 3Q12 4Q12 1Q13 2Q13 3Q13 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region Nov-09 Nov-10 Nov-11 Nov-12 OECD North America OECD Europe OECD Pacific

7 Page 7 MMb US Commercial Stocks November 30, - December Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 3Q11 4Q11 1Q12 2Q12 3Q12 SOURCE: EIA Weekly Petroleum Status Report. SOURCE: IEA Oil Market Report. Relevant Independent Objective

8 Page 8 World Supply and Demand Balance (MMbpd) Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 World Demand OECD non-oecd World Supply Non-OPEC OPEC NGLs OPEC Crude Supply - Demand OECD Stocks (MMbbls) Days Cover OPEC Crude Oil Production (MMbpd) Sustainable Production Over (+)/Under (-) Target Capacity Oct-12 Nov-12 Dec-12 Oct-12 Nov-12 Dec-12 Saudi Arabia Iran UAE Kuwait Qatar Nigeria Libya Algeria Ecuador OPEC Iraq Total OPEC WTI Price Projections ($US/barrel) Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 High Price Case Reference Case Low Price Case

9 Page 9 Data Appendix Relevant Independent Objective

10 Page 10 A1: Historic Light Sweet Crude Futures Prices ($US per barrel) NYMEX Light Sweet Crude Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg. -1.1% 0.0% 2.9% 3.7% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. -7.3% -6.0% -10.8% -9.6% A2: Historic Crude Product Futures Prices ( US per gallon) NYMEX Unleaded Gasoline NYMEX Heating Oil Last 3 Day Avg. When 12-Month Spread Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg. 13.1% 10.6% 6.3% 3.8% 4.7% 4.3% 3.8% 3.3% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. 4.9% 5.3% 3.8% 3.6% 4.4% 5.0% 3.2% 2.2% Notes (Tables A1 and A2): Prices are listed by contract month. Close: final contract close on the last day of trading. Last 3 Day Average Close: simple average contract close on last three days of trading. Average When Near Month: simple average closing price on trading days when contract was near month. 12-Month Strip Average: simple average of daily near 12-month contract closing prices in a given contract month. Spread: difference between one-month and two-month forward prices in a given period. Source: New York Mercantile Exchange (NYMEX).

11 Page 11 A3: World Crude Oil Contract Prices (FOB, $US per barrel) Saudi U.A.E. Oman U.K. Norway Russia Venez. Kuwait Ecuador Mexico Nigeria Indon. Arab Lgt Dubai Oman Brent Ekofisk Urals 1 T.J. Light Blend Oriente Isthmus Bonny Lgt Minas Q Q Q Q Q Yr-on-Yr Chg. -0.9% 0.1% 0.0% -2.5% -3.2% -0.9% -0.2% 0.5% -1.5% 1.7% -2.4% -3.7% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 2.5% 4.5% 3.7% 2.0% 1.0% 2.0% -1.2% 3.3% -4.8% -0.8% 0.2% 1.3% Notes: 1. Urals is Delivered price at Mediterranean. Contract prices are based on prices at the end of each month. Source: OPEC Monthly Oil Market Report. A4: North American Posted Crude Prices (FOB, $US per barrel) United States Canada ANS 1 Lost Hills Kern R. WTI WTS GCS Okla. Sw. Kans. Sw. Mich. So. Wyo. Sw. ELS 2 HH Q Q Q Q Q Yr-on-Yr Chg. -3.5% -8.4% -10.6% -9.5% -10.1% -10.3% -9.5% -10.7% -10.4% -11.9% -13.6% -16.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -7.8% 0.0% -4.0% -10.8% -11.4% -11.6% -10.8% -10.6% -11.7% -13.9% -24.0% -32.1% Notes: 1. ANS is Delivered price on US West Coast. 2. Edmonton Light Sweet. 3. Hardisty Heavy. Posted prices are based on price at the end of each month. Sources: Oil & Gas Journal; Natural Resources Canada. Relevant Independent Objective

12 Page 12 A5: Crude Oil Quality Differentials (FOB, $US per barrel) Light vs. Heavy Sweet vs. Sour Arab Lt Arab Hv Diff. Isthmus Maya Diff. ELS 1 HH 2 Diff. GCS WTS Diff Q Q Q Q Q Yr-on-Yr Chg. -0.9% 1.5% 1.7% -1.5% -11.6% -8.1% 7.6% 7.6% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 2.5% 4.4% -0.8% -2.7% 2.4% 6.1% -10.3% -10.0% Notes: 1. Edmonton Light Sweet. 2. Hardisty Heavy. Based on contract prices at the end of each month. Sources: OPEC Monthly Oil Market Report: Oil & Gas Journal; Natural Resources Canada. A6: Crude Oil Spot Prices and Differentials (FOB, $US per barrel) Spot Prices Differentials WTI Brent Dubai Urals Basket 1 WTI-Brent WTI-Dubai WTI-Urals WTI-Basket Q Q Q Q Q Yr-on-Yr Chg. -6.2% 0.7% 0.9% 0.2% -0.6% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg % 1.2% 0.1% 0.6% -2.9% Notes: 1. OPEC-Reference Basket is average price of seven crude streams: Algeria Saharan Blend, Dubai Fateh, Indonesia Minas, Mexico Isthmus, Nigeria Bonny Light, Saudi Arabia Light and Venezuela Tia Juana Light. Source: OPEC Monthly Oil Market Report.

13 Page 13 A7: World Petroleum Product Spot Prices ($US per barrel) NY Harbor, Barges Rotterdam, Barges Singapore, Cargoes Gasoline 1 No. 2 H.O. Resid. 2 Gasoline 1 Gasoil Resid. 3 Gasoline 1 Gasoil Resid Q Q Q Q Q Yr-on-Yr Chg. 0.4% -4.1% 16.4% 5.7% 0.5% -5.9% 4.2% 0.9% -6.9% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -2.6% -2.1% 18.6% 3.9% -0.3% -6.9% 4.3% 8.3% -8.1% Notes: 1. Regular unleaded gasoline. 2. High Sulfur (3.0%) Residual Fuel Oil. 3. High Sulfur (3.5%) Residual Fuel Oil. Spot prices are based on average daily prices over a specific timeframe. Source: IEA Oil Market Report. A8: Product Spot Prices in Selected American Cities ( US per gallon) NY Harbor US Gulf Los Angeles Gasoline 1 No. 2 H.O. Distill. Gasoline 1 Jet Fuel Distill. Gasoline 1 Distill Q Q Q Q Q Yr-on-Yr Chg. 6.0% 2.8% 4.9% 0.0% 1.4% 2.6% 1.8% 0.8% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 3.5% 3.6% 4.5% -2.7% 2.3% 2.8% -3.2% 2.1% Notes: 1. Reformulated regular unleaded gasoline. Spot prices are based on average daily prices over a specific timeframe. Source: EIA Weekly Petroleum Status Report. Relevant Independent Objective

14 Page 14 B1: World Petroleum Supply and Demand Balance (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total 1 Asia Non-Asia FSU Total 1 P. Gulf Non-Gulf Total 2 Total 3 Demand Q Q Q Q Q Q Q Q Q Supply Q Q Q Q Q Q Q Q Q Balance Q Q Q Q Q Q Q Q Q Notes: 1. Totals for OECD and non-oecd supply include net refining gains; specific regions/groupings within each do not. 2. OPEC demand is an estimate based on historical annual data. 3. Balance for World equals global stockbuilds (+) and stockdraws (-) for crude oil and petroleum products and miscellaneous gains and losses. Regional surpluses (+) and deficits (-) are balanced through net-imports and stock changes in the short-term, and net-imports in the longer term. Supply includes crude oil, condensates, NGLs, oil from non-conventional sources and processing gains. Demand is for petroleum products. Source: IEA Oil Market Report.

15 Page 15 B2: World Petroleum Production (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total Asia Non-Asia FSU Total P. Gulf Non-Gulf Total Total Q Q Q Q Q Yr-on-Yr Chg. 8.2% -12.3% 20.4% 4.6% 2.5% -4.7% 1.8% 0.1% -0.1% 11.4% 3.2% 2.5% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 10.6% -10.6% 6.7% 6.3% 0.1% -4.2% 0.7% -0.8% -2.3% 8.0% 0.7% 1.4% R/P Ratio Notes: 1. Production includes crude oil, condensates and NGLs. 2. Reserve-Production ratio is based on latest month production and British Petroleum reserve estimates. Sources: IEA Oil Market Report and BP Statistical Review of World Energy. B3: OECD Commercial Petroleum Stocks (million barrels) North America Europe Asia-Pacific OECD Crude Product Total Crude Product Total Crude Product Total Crude Product 1 Total , ,431 2, , ,422 2, , ,408 2,601 3Q , ,427 2,665 4Q , ,408 2,601 1Q , ,388 2,659 2Q , ,010 1,374 2,699 3Q , ,430 2,738 Yr-on-Yr Chg. 9.3% -1.8% 2.9% 0.3% 2.2% 1.9% 9.4% 2.4% 4.2% 6.3% 0.2% 2.8% Nov , ,414 2,654 Dec , ,408 2,601 Jan , ,430 2,652 Feb , ,388 2,629 Mar , ,388 2,659 Apr , ,379 2,681 May , ,007 1,375 2,693 Jun , ,010 1,374 2,699 Jul , ,000 1,412 2,726 Aug , ,431 2,731 Sep , ,430 2,738 Oct , ,405 2,712 Nov , ,393 2,693 Yr-on-Yr Chg. 7.4% -2.5% 1.8% 2.7% -0.6% 0.1% 9.8% -0.2% 3.4% 6.2% -1.5% 1.5% Notes: 1. Product includes only finished petroleum products. 2. Total stocks include NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. All stocks are closing levels for respective reporting period. Source: IEA Oil Market Report. Relevant Independent Objective

16 Page 16 B4: OPEC Crude Oil Production and Targets (million barrels per day) Persian Gulf Non-Persian Gulf OPEC-11 OPEC-11 Arabia Iran UAE Kuwait Qatar Venez. Nigeria Libya Algeria Angola Ecuador Total 1 Target Iraq Q Q Q Q Q Yr-on-Yr Chg. -0.2% -22.8% 5.1% 1.5% -1.4% 3.3% -3.4% 158.2% 0.0% 1.2% 2.0% 0.9% 16.4% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -5.0% -21.7% 3.9% 6.9% -9.8% 0.0% 1.9% 86.7% -8.5% -1.1% 4.2% -1.6% 10.4% Quotas Over/Under % -19.2% 20.7% 25.2% 1.4% 25.6% 25.7% -4.8% -1.7% 13.8% 16.3% -7.8% Notes: 1. Does not include NGLs; OPEC production targets apply to crude oil only. 2. Iraq does not have an official OPEC target. 3. OPEC-10 production targets. 4. As of latest month. Source: IEA Oil Market Report. B5: OECD Refinery Activity Crude Input (MMbpd) - Utilization (percent) - Refining Margins ($US/barrel) North America Europe Asia-Pacific OECD Input Util. Margin 1 Input Util. Margin 2 Input Util. Margin 3 Input Util Q Q Q Q Q Yr-on-Yr Chg. -0.4% % 1.8% 862.7% 5.0% % 1.2% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Yr-on-Yr Chg. 0.7% -65.7% -0.2% 933% 1.2% 70.0% 0.5% Notes: 1. Based on dated Brent being processed in average US Gulf cracking refinery. 2. Based on dated Brent in average Rotterdam cracking refinery. 3. Based on spot Dubai in average Singapore hydroskimming refinery. Source: IEA Oil Market Report.

17 Page 17 C1: US Petroleum Supply and Demand Balance (million barrels per day) United States 1 East Mid-West Supply Demand Net-Imp. Stk. Chg. Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 7.7% -0.9% -8.3% 7.8% -2.5% 13.9% -0.7% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Yr-on-Yr Chg. 11.3% -0.7% -16.1% -4.0% -8.4% 7.7% -1.9% % of Total % 100.0% 1.3% 27.2% 23.1% 25.7% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 9.1% 0.7% 7.6% 3.0% -8.0% -2.1% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Yr-on-Yr Chg. 17.6% 10.9% 4.3% -2.9% -0.2% -3.2% % of Total % 29.1% 7.6% 3.4% 12.6% 14.6% Notes: 1. Does not balance because of unaccounted for crude oil. Regional surpluses (+) and deficits (-) are balanced through net-imports/transfers and stock changes in the short-term, and net-imports/transfers in the longer term. 2. As of most recent month. Supply includes crude oil, condensates, NGLs, oil from nonconventional sources and processing gains. Demand is for petroleum products. Source: EIA Petroleum Supply Monthly. Relevant Independent Objective

18 Page 18 C2: US Petroleum Demand by Product (million barrels per day) Finished Petroleum Products NGLs Petroleum Gasoline Jet Fuel Distil. Resid. Total 1 Total Total Q Q Q Q Q Yr-on-Yr Chg. -0.3% -2.7% -3.2% -3.9% -2.2% 8.8% -0.9% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Yr-on-Yr Chg. 0.1% -1.4% -3.8% -25.6% -2.2% 4.2% -0.7% Notes: 1. Total includes other finished petroleum products. 2. Total petroleum demand includes refinery feedstocks, additives/oxygenates and other hydrocarbons. Source: EIA Petroleum Supply Monthly. C3: US Petroleum Stocks (million barrels) Petroleum Stocks 1 Crude Oil Finished Products East Mid-West S-Cent N-West West U.S. Total 2 Gasoline Jet Fuel Distil. Resid. Total , ,776 1, , ,794 1, , ,751 1, Q , ,781 1, Q , ,751 1, Q , ,777 1, Q , ,808 1, Q , ,818 1, Yr-on-Yr Chg % 6.3% 3.8% 8.4% 1.9% 2.1% 3.5% -14.3% -4.5% -17.1% 2.8% -10.5% Nov , ,772 1, Dec , ,751 1, Jan , ,771 1, Feb , ,764 1, Mar , ,777 1, Apr , ,776 1, May , ,794 1, Jun , ,808 1, Jul , ,809 1, Aug , ,801 1, Sep , ,818 1, Oct , ,810 1, Nov , ,809 1, Yr-on-Yr Chg % 2.9% 4.4% 12.2% 3.7% 2.1% 3.9% -8.3% -3.2% -18.2% -4.4% -10.1% Notes: 1. Petroleum stocks include crude oil, finished products, NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. 2. Includes Strategic Petroleum Reserves. 3. Total includes other finished petroleum products. All stocks are closing levels for respective reporting period. Source: EIA Petroleum Supply Monthly.