Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 3/4 ~ 3/10 1, Imports n.a. n.a. n.a Supply/ Demand Shipments

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1 Overview March 23, 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 March 1-7 week moved within a narrow range between $60.99 per barrel and $62.60/bbl. On March 8, the April contract dropped further as concerns about U.S. oil oversupply grew on the previous day s weekly EIA (Energy Information Administration) report including record-high U.S. oil production and gasoline inventories remaining high. Concerns about U.S. protectionism also dampened the market. The key contract closed at $60.12/bbl, down $1.03/bbl from the previous day. On March 9, the April contract rallied for the first time in three days with a steep gain as investors took a risk appetite attitude and intensified buying on the announcement of a U.S.-North Korea summit and a U.S. stock market rally. Also supporting buying were the dollar s depreciation against the euro on U.S. jobs data and a Baker Hughes report that the number of operating U.S. oil-drilling rigs dropped by four from to 796 for the first fall in seven weeks. The key contract rose by $1.92/bbl to $62.04/bbl. On March 12, the April contract turned down as profit-taking selling after the steep gain on the previous trading day outpaced buying and as non-commercial traders (including investors) posted net selling in end trading position report. However, the dollar s depreciation and the first decline in the number of operating U.S. oil-drilling rigs in seven weeks supported buying. The key contract gained $0.68/bbl to $61.36/bbl. On March 13, the key contract fell further as concerns about U.S. oil oversupply lingered on a monthly EIA report predicting U.S. shale oil production s rise to a record 6.95 million barrels per day in April and on a U.S. crude oil inventory increase forecast before the imminent announcement of U.S. government and private sector oil inventory reports. The April contract fell by $0.65/bbl to $60.71/bbl. On March 14, the key contract rebounded for the first time in three trading days as buying came on a decline in OPEC (Organization of the Petroleum Exporting Countries) oil production in February as unveiled by a monthly OPEC report and the dollar s depreciation against the euro that made crude futures prices relatively lower, even though ly EIA oil inventory report included a far-faster-than-expected increase in U.S. crude oil inventories. The April contract gained $0.25/bbl to $60.96/bbl. The Asian benchmark crude oil of Dubai for April delivery on the Tokyo market moved in a range between $60.40/bbl and $62.30/ bbl in the March 1-7 week. It closed at $60.90/bbl on March 8, at $60.40/bbl on March 9, at $62.00/bbl on March 12, at $61.50/bbl on March 13 and at $61.10 on March 14. On the foreign exchange market in the March 1-7 week, the dollar moved within a range between and yen. It changed hands at yen in late trading on March 8, at yen on March 9, at yen on March 12, at yen on March 13 and at yen on March 14. Wholesale prices that major Motouri (petroleum products wholesalers) applied to the third week of March were cut by yen/l for gasoline, diesel oil and kerosene (heating oil). Crude oil acquisition cost fell as crude oil prices dropped slightly, with the yen appreciating against the dollar moderately. Japan s average retail price on March 12 fell by 0.3 yen/l from for gasoline and by 0.2 yen/l for diesel oil and leveled off for kerosene on an 18-liter tank basis. The gasoline price fell for the fourth straight week, while the diesel price dropped for the third consecutive week. The kerosene price stopped a decline for the first time in three weeks on an 18-liter tank basis. While crude oil cost declined in the second week of March, Motouri companies left their wholesale prices unchanged or cut them by 1.0 yen/l for gasoline, diesel oil and kerosene. Crude oil a year Crude oil runs (1,000 kl) 3/4 ~ 3/10 3, Supply/ Topper capacity Demand utilization rate Crude oil inventories Middle Eastern crude oil (TOCOM) (%) (1,000 kl) 3/10 12, ($/bbl) 3/ ($/b) [NYMEX]WTI crude oil [TOCOM]MiddleEastern crude oil WTI crude oil (NYMEX) Crude oil import CIF price 1Crude oil import CIF price 2Yen-dollar exchange rate ($/bbl) 3/ ($/bbl) Mid Feb (yen/kl) 47,507 1,095 8,052 (yen/dollar) TTS exchange rate (yen/dollar) 3/ /5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 3/12 1

2 Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 3/4 ~ 3/10 1, Imports n.a. n.a. n.a Supply/ Demand Shipments Exports Inventories 3/10 1, Gyoten (spot) [4-district average lorry rack price] Futures [front-month contract/closing price] (RIM) 3/6 ~ 3/ Tokyo Bay) 3/6 ~ 3/ / Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 3/ by ANRE) /11 1/9 2/7 3/8 3/12 Diesel oil (Unit: 1,000 kl, yen/l) a year Diesel oil (retail) Production 3/4 ~ 3/ Imports n.a. n.a. n.a Supply/ Demand Shipments Exports Inventories 3/10 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 3/6 ~ 3/ Futures [front-month contract/closing price] Tokyo Bay) 3/6 ~ 3/ / Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 3/ by ANRE) /11 1/9 2/7 3/8 3/12 Kerosene (Unit: 1,000 kl, yen/l) a year 95.0 Kerosene (retail) Production 3/4 ~ 3/ Imports n.a. n.a. n.a Supply/ Demand Shipments Exports Inventories 3/10 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 3/6 ~ 3/ Futures [front-month contract/closing price] Tokyo Bay) 3/6 ~ 3/ / Chubu) 80.0 Retail prices [weekly (published 3/ by ANRE) /11 1/9 2/7 3/8 3/12 2

3 Relevant Information Overseas crude oil prices 1 On March 14, the EIA s weekly oil inventory report said that U.S. crude oil inventories posted an increase of 5 million barrels from, far faster than a market-forecast rise of 2 million barrels, expanding for the third straight month. Supported by a monthly OPEC report on the same day that OPEC oil production in February decreased by 70,000 barrels per day to million bpd and by the dollar s depreciation against the euro that made oil futures prices relatively lower, however, the most frequently traded WTI crude futures contract on NYMEX rallied for the first time in three trading days. The April contract rose by $0.25/bbl to $60.96/bbl. The May contract gained $0.27/bbl to $61.02/bbl. According to the EIA, the average U.S. retail price of gasoline as of March 12 dropped by 0.1 cents per gallon from to $2.559/gal (72.9 yen/l). The average diesel oil price decreased by 1.6 cents/gal to $2.976/gal (84.8 yen/l). The gasoline price fell for the first time in two weeks. The diesel price dropped for the fifth straight 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 March 4-10 week stood at 26,000 bpd, down 94,000 bpd from the previous week (total capacity stood at 3,519,000 bpd). Crude oil throughput in the week increased by 62,000 kl from the previous week to 3,727,000 kl. a year, it increased by 21,000 kl. The topper capacity utilization rate stood at 95.2%, up 1.6 points from the previous week and up 7.3 points from a year. Output decreased from the previous week for gasoline and kerosene and increased for other petroleum products. Output was down 2.2% for gasoline, up 2.7% for jet fuel, down 23.7% for kerosene, up 0.7% for diesel oil, up 1.7% for Fuel Oil A and up 22.7% for Fuel Oil C. Fuel Oil C imports in the week totaled 183,000 kl, up 123,000 kl from the previous week. Diesel oil exports aggregated 173,000 kl, up 166,000 kl. Shipments (excluding imports) in the week increased from the previous week only for jet fuel and decreased for other petroleum products. a year, shipments increased for gasoline, jet fuel and diesel oil while decreasing for others. Gasoline shipments decreased by 5.8% from the previous week to 877,000 kl. They decreased week on week for the first time in two weeks and increased year on year for the first time in three weeks, remaining below 1 million kl for 10 weeks on end. Shipments totaled 145,000 kl for jet fuel (up 26.5% from the previous week), 342,000 kl for kerosene (down 22.5%), 621,000 kl for diesel oil (down 2.6%), 259,000 kl for Fuel Oil A (down 6.9%) and 267,000 kl for Fuel Oil C (down 17.3%). Kerosene (heating Oil) Previous week (3/4 ~ 3/10) (2/25 ~ 3/3) Gasoline Jet fuel Diesel oil Fuel oil A Fuel Oil C Total 2,511 2,724 (Unit: 1,000 kl) -53 (-6%) 31 (27%) -100 (-23%) -16 (-3%) -19 (-7%) -56 (-17%) -213 (-8%) 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 March 10 increased from for gasoline, kerosene and Fuel Oil C and decreased for other petroleum products. a year, inventories expanded for gasoline and kerosene and declined for others. Gasoline inventories totaled 1,698,000 kl, up 18,000 kl from and up 5,000 kl from a year. Kerosene inventories totaled 1,346,000 kl, up 60,000 kl from and up 111,000 kl from a year. Diesel oil inventories totaled 1,199,000 kl, down 69,000 kl from and down 363,000 kl from a year. Fuel Oil A inventories totaled 666,000 kl, down 1,000 kl from and down 92,000 kl from a year. Fuel Oil C inventories totaled 1,926,000 kl, up 119,000 kl from and down 43,000 kl from a year. (3/10) (3/3) Gasoline 1,698 1,680 Jet fuel Kerosene (heating Oil) Previous week 1,346 1,286 Diesel oil 1,199 1,268 Fuel oil A Fuel Oil C 1,926 1,807 (Unit: 1,000 kl) 18 (1%) -40 (-5%) 60 (5%) -69 (-5%) -1 (-0%) 119 (7%) Total 7,546 7, (1.2%) 3

4 3 Petroleum products wholesale prices in Japan (1) Wholesale price revision trend In the March 6-12 week, crude oil cost apparently decreased as crude oil prices fell, with the yen appreciating against the dollar slightly. Onshore cargo spot prices between March 6 and 12 fell 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 fell and rose back sharply in a yen/l range for gasoline, dropped and rallied in a yen/l range for diesel oil and decreased sharply 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, leveled off in a yen/l range for diesel oil and fell and rallied slightly in a yen/l range for kerosene. 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 Among spot petroleum product prices, offshore barge spot prices for gasoline rose and the key futures price for diesel oil leveled off. All others declined. The latest onshore cargo spot price (the average onshore rack price for four districts -- Chiba, Kawasaki, Chukyo and Hanshin -- for the March 6-12 week) that influences Motouri s wholesale prices applied to the third week of March (March 15-21) fell by 0.7 yen/l from the previous week for gasoline, by 1.1 yen/l for kerosene and by 0.1 yen/l for diesel oil. The average offshore barge spot price in Tokyo Bay rose by 0.3 yen/l for gasoline and dropped by 5.5 yen/l for kerosene and by 1.0 yen/l for diesel oil. The key futures price fell by 0.7 yen/l for gasoline and by 0.6 yen/l for kerosene and leveled off for diesel oil. Crude oil cost decreased as crude oil prices declined, with the yen appreciating against the dollar slightly. For the third week of March, 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] (3/6 ~ 3/12) (2/27 ~ 3/5) Regular Kerosene Diesel oil (TOCOM) [Front-month contract/closing Previous week price] [Average] (3/6 ~ 3/12) (2/27 ~ 3/5) Regular Kerosene Diesel oil Above prices are before tax. Reference (March 6 - March 12 actual data) Products Spot Futures Average Gasoline Kerosene Diesel oil Fuel Oil A -0.4 (Source) Spot: RIM 4-district average lorry rack price (Chiba, Kawasaki, Chukyo, Hanshin) Futures: TOCOM average offshore barge spot price for Keihin District 4 Retail prices of petroleum products in Japan The average retail service station price as of March 12 decreased by 0.3 yen/l from to yen/l for gasoline and by 0.2 yen/l to yen/l for diesel oil and remained unchanged at 88.1 yen/l for kerosene (on an 18-liter tank basis, the kerosene price also remained unchanged at 1,585 yen). The gasoline price dropped for the fourth straight week. The diesel price declined for the third consecutive week. The kerosene price stopped a fall for the first time in three weeks. Gasoline prices increased in four of Japan s 47 prefectures, remained unchanged in five and decreased in 38. The lowest gasoline price among the prefectures was yen/l in Tokushima Prefecture (down 0.3 yen/l from ). The second lowest was yen/l in Saitama (down 0.4 yen/l). The highest price was yen/l in Nagasaki (down 0.1 yen/l). Posting the largest price hike of 0.3 yen/l were Saga (148.8 yen/l) and Yamanashi (145.0 yen/l). Logging the largest price drop of 1.8 yen/l was Ishikawa (142.9 yen/l). While crude oil cost decreased in the previous week, Motouri companies left their wholesale prices unchanged or cut them by 1.0 yen/l for gasoline, diesel oil and kerosene. The average retail gasoline price fell for the fourth straight week., crude oil cost decreased as crude oil prices dropped, with the yen appreciating against the dollar slightly. Retail gasoline and kerosene prices are expected to increase slightly next week (as of March 19). (Published by ANRE)[Weekly Previous week (3/12) (3/5) 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 Gasoline price trend (2017/12/25 ~ 2018/3/12) ( /L ) 85.0 Left scale: retail prices Retail price RIM (offshore barge) RIM (onshore) TOCOM/ futures, Tokyo Bay TOCOM/ futures, Chubu Right scale: RIM and futures prices /25 1/9 1/15 1/22 1/29 2/5 2/13 2/19 2/26 3/5 3/12 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 Announcement This report is available at the center s website ( The next issue (No. 48 for 2017) will be announced at 14:00 on March 30. 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