Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 11/19 ~ 11/25 1, Supply/ Demand Imports n.a. n.a. n.a. Shipment

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1 Overview December 8, 2017, 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 the NYMEX (New York Mercantile Exchange) in the November week moved within a range between $55.14 per barrel and $58.02/bbl. On November 24, the January contract rose for the third straight trading day on growing concerns about a tighter supply-demand balance as crude oil inventories at the WTI delivery point of Cushing decreased on a supply cut attributable to an accidental leak from the Keystone pipeline linking Canada to the United States. The key contract hit the highest level since late June 2015 for the second straight trading day, closing at $58.95/bbl, up $0.93/bbl from the previous day. On November 27, the key contract turned down for the first time in four trading days on growing concerns about shale oil production expansion and uncertainties about Russia s possible agreement at a November 30 meeting of OPEC (Organization of the Petroleum Exporting Countries) and non-opec oil producing countries in Vienna to extend their coordinated production cut. Indicating shale oil production expansion were an Baker Hughes report that the number of operating U.S. oil-drilling rigs increased by nine from to 747 and a monthly EIA (Energy Information Administration) report that U.S. crude oil production increased by 15% year on year to 9.66 million barrels per day. Russia plans to increase production under the Sakhalin-1 oil and gas project next year, leaving its possible agreement to extend the coordinated production cut in the balance. The January contract fell by $0.84/bbl to $58.11/bbl. On November 28, the key contract fell further as expectations of the possible agreement to extend the coordinated production cut by OPEC and non-opec oil producing countries at their November 30 meeting were dampened by Saudi Arabian Energy Minister Khalid al-falih s remark admitting different views about the timing for crude oil inventories fall to normal levels and UAE (United Arab Emirates) Oil Minister Suhail bin Mohammed al-mazroui s statement that it was not easy to argue for the extension. The January contract fell by $0.12/bbl to $57.99/bbl. On November 29, the key contract fell for the third straight trading day on growing doubts over the extension of the coordinated production cut just before the joint meeting of OPEC and non-opec oil producing countries and on ly EIA report that pointed to faster-than-forecast increases in U.S. gasoline and middle distillate inventories despite a faster-than-forecast drop in crude oil inventories. The January contract closed at $57.30/bbl, down $0.69/bbl. The Asian benchmark crude oil of Dubai for January delivery on the Tokyo market moved in a range between $59.60/bbl and $60.90/bbl in the November week. It closed at $61.40/bbl on November 24, at $61.60/bbl on November 27, at $61.20/bbl on November 28 and at $61.10/bbl on November 29. On the foreign exchange market in the November week, the dollar moved within a range between and yen. It changed hands at yen in late trading on November 24, at yen on November 27, at yen on November 28 and at yen on November 29, remaining weak against the yen. According to preliminary 10-day trade statistics released by the Ministry of Finance on November 29, the average crude oil import CIF price in the November 1-10 period stood at 40,456 yen/kl (kiloliter), up 1,182 yen/kl from the previous 10-day period. In dollars, the price was $56.78/bbl, up $1.26/bbl. The average exchange rate was yen to the dollar. Wholesale prices that major Motouri (petroleum products wholesalers) applied to the first week of December were left unchanged for gasoline and diesel oil by all Motouri companies. Kerosene (heating oil) prices were kept unchanged by some of them and raised by 0.5 yen/ l (liter) by others. Crude oil acquisition cost rose slightly as crude oil price hikes were almost offset by the yen s appreciation against the dollar. Japan s average retail price on November 27 rose by 1.0 yen/l from for gasoline, by 0.9 yen/l for diesel oil and by 1.0 yen/l for kerosene. The gasoline and diesel prices rose for the 11th straight week. The kerosene price also increased for the 11th consecutive week on an 18-liter tank basis. As crude oil cost fell in the fourth week of November (changed from the fifth week of November under the previous practice), Motouri companies lowered their wholesale prices by yen/l for gasoline, diesel oil and kerosene. Crude oil a year Crude oil runs (1,000 kl) 11/19 ~ 11/25 3, Supply/ Topper capacity Demand utilization rate Crude oil inventories Middle Eastern crude oil (TOCOM) (%) (1,000 kl) 11/25 13, ($/bbl) 11/ ($/b) [NYMEX]WTI crude oil [TOCOM]MiddleEastern crude oil WTI crude oil (NYMEX) Crude oil import CIF price 1Crude oil import CIF price 2Yen-dollar exchange rate ($/bbl) 11/ ($/bbl) Early Nov (yen/kl) 40,456 1,182 8,041 (yen/dollar) TTS exchange rate (yen/dollar) 11/ /5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 11/27 1

2 Gasoline (Unit: 1,000 kl, yen/l) a year Gasoline (retail) Production 11/19 ~ 11/25 1, Supply/ Demand Imports n.a. n.a. n.a. Shipments Exports Inventories 11/25 1, Gyoten (spot) [4-district average lorry rack price] Futures [front-month contract/closing price] (RIM) 11/21 ~ 11/ Tokyo Bay) 11/21 ~ 11/ / Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 11/ by ANRE) /4 10/3 11/1 11/27 Diesel oil (Unit: 1,000 kl, yen/l) a year Diesel oil (retail) Production 11/19 ~ 11/ Imports n.a. n.a. n.a. Supply/ Demand Shipments Exports Inventories 11/25 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 11/21 ~ 11/ Futures [front-month contract/closing price] Tokyo Bay) 11/21 ~ 11/ / Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 11/ by ANRE) /4 10/3 11/1 11/27 Kerosene (Unit: 1,000 kl, yen/l) a year 95.0 Kerosene (retail) Production 11/19 ~ 11/ Imports n.a. n.a. n.a. Supply/ Demand Shipments Exports Inventories 11/25 2, Gyoten (spot) [4-district average lorry rack price] (RIM) 11/21 ~ 11/ Futures [front-month contract/closing price] Tokyo Bay) 11/21 ~ 11/ / Chubu) 75.0 Retail prices [weekly (published 11/ by ANRE) /4 10/3 11/1 11/27 2

3 Relevant Information Overseas crude oil prices 1 On November 29, the most frequently traded WTI crude oil futures contract on the NYMEX fell for the third straight trading day on faster-than-forecast increases in U.S. gasoline and middle distillate inventories in the weekly EIA report and growing doubts over the extension of the coordinated production cut just before the joint meeting of OPEC and non-opec oil producing countries. The EIA report pointed to the increases in gasoline and middle distillate inventories while noting that crude oil inventories posted a decline of 3.4 million barrels, faster than a market-forecast drop of 2.3 million barrels, as Canadian crude oil supply declined due to the Keystone pipeline leakage accident. While the OPEC and Non-OPEC Joint Ministerial Supervisory Committee recommended a nine-month extension of the coordinated production cut toward the November 30 OPEC and non-opec joint meeting, Russia s position on the extension remained uncertain, leading to the doubts. The January contract closed at $57.30/bbl, down $0.69/bbl. The February contract fell by $0.69/bbl to $57.36/bbl. According to the EIA, the average U.S. retail price of gasoline as of November 27 dropped by 3.5 cents per gallon from to $2.533/gal (75.3 yen/l). The average diesel oil price fell by 1.4 cents/gal to $2.926/gal (87.0 yen/l). The gasoline price decreased for the second straight week. The diesel price rose for the first time in two weeks. 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 November week stood at 86,000 bpd, down 34,000 bpd from the previous week (total capacity stood at 3,519,000 bpd). Crude oil throughput in the week increased by 17,000 kl (kiloliters) from the previous week to 3,654,000 kl. a year, it decreased by 73,000 kl. The topper capacity utilization rate stood at 93.3%, up 0.4 percentage points from the previous week and up 4.9 points from a year. Output decreased from the previous week for diesel oil and Fuel Oil C while increasing for other petroleum products. Output was up 3.1% for gasoline, up 65.0% for jet fuel, up 33.8% for kerosene, down 3.6% for diesel oil, up 5.5% for Fuel Oil A and down 6.2% for Fuel Oil C. Fuel Oil C imports in the week totaled less than 500 kl, down 67,000 kl from the previous week. Diesel oil exports aggregated 142,000 kl, down 17,000 kl. Shipments (excluding imports) in the week increased from the previous week for kerosene and Fuel Oil A and decreased for other petroleum products. a year, shipments increased for jet fuel and kerosene and decreased for others. Gasoline shipments decreased by 3.5% from the previous week to 934,000 kl. They decreased week on week and year on year for the second straight week, remaining below 1 million kl for four weeks on end. Shipments totaled 49,000 kl for jet fuel (down 29.3% from the previous week), 498,000 kl for kerosene (up 149.1%), 604,000 kl for diesel oil (down 7.3%), 229,000 kl for Fuel Oil A (up 9.8%) and 151,000 kl for Fuel Oil C (down 30.9%). Kerosene (heating Oil) Previous week (11/19 ~ 11/25) (11/12 ~ 11/18) Gasoline Jet fuel Diesel oil Fuel oil A Fuel Oil C Total 2,465 2,315 (Unit: 1,000 kl) -33 (-3%) -20 (-29%) 298 (149%) -48 (-7%) 21 (10%) -68 (-31%) 150 (6%) 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 November 25 decreased from for gasoline, kerosene and Fuel Oil A and increased for other petroleum products. a year, inventories decreased for gasoline, diesel oil and Fuel Oil A and increased for other petroleum products. Gasoline inventories totaled 1,633,000 kl, down 66,000 kl from and down 1,000 kl from a year. Kerosene inventories totaled 2,525,000 kl, down 137,000 kl from and up 166,000 kl from a year. Diesel oil inventories totaled 1,451,000 kl, up 62,000 kl from and down 95,000 kl from a year. Fuel Oil A inventories totaled 670,000 kl, down 2,000 kl from and down 47,000 kl from a year. Fuel Oil C inventories totaled 2,038,000 kl, up 57,000 kl from and up 176,000 kl from a year. (11/25) (11/18) Gasoline 1,633 1,699 Jet fuel 1,060 1,036 Kerosene (heating Oil) Previous week 2,525 2,662 Diesel oil 1,451 1,389 Fuel oil A Fuel Oil C 2,038 1,981 (Unit: 1,000 kl) -66 (-4%) 24 (2%) -137 (-5%) 62 (4%) -2 (-0%) 57 (3%) Total 9,377 9, (-0.7%) 3

4 3 Petroleum products wholesale prices in Japan (1) Wholesale price revision trend Between November 21 and 27, crude oil cost apparently increased slightly as crude oil price hikes were almost offset by the yen s appreciation against the dollar. Onshore cargo spot prices weakened 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 rose and fell back in a yen/l range for gasoline, slightly weakened in a yen/l range for diesel oil and leveled off in a yen/l range for kerosene. The key futures price slightly rose and weakened in a yen/l range for gasoline, leveled off in a yen/l range for diesel oil and weakened and firmed in a yen/l range for kerosene. Motouri companies kept their wholesale prices unchanged for gasoline and diesel oil. Kerosene prices were left unchanged by some of them and raised by 0.5 yen/l by others. 3 Petroleum products wholesale prices in Japan (2) Spot (Gyoten) and futures price trend While crude oil cost increased in the November week, offshore barge prices for gasoline and diesel oil and futures prices for diesel increased, with all other spot petroleum products prices decreasing. The latest onshore cargo spot price (the average onshore rack price for four districts -- Chiba, Kawasaki, Chukyo and Hanshin -- for the November week) that influences Motouri s wholesale prices applied to the first week of December (November 30-December 6), fell by 0.8 yen/l from the previous week for gasoline and by 0.6 yen/l for kerosene and diesel oil. The average offshore barge spot price in Tokyo Bay increased by 0.3 yen/l for gasoline and by 0.6 yen/l for kerosene and leveled off for diesel oil. The key futures price fell by 0.4 yen/l for gasoline and by 0.2 yen/l for kerosene and rose by 3.0 yen/l for diesel oil. Crude oil cost increased slightly as crude oil price hikes were mostly offset by the yen s appreciation against the dollar. For the first week of December, Motouri companies kept their wholesale prices unchanged for gasoline and diesel oil. Kerosene prices were left unchanged by some of them and raised by 0.5 yen/l by others. 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 costs since June Spot Futures Price (RIM) [4-district average lorry Previous week rack price] (11/21 ~ 11/27) (11/14 ~ 11/20) Regular Kerosene Diesel oil (TOCOM) [Front-month contract/closing Previous week price] [Average] (11/21 ~ 11/27) (11/14 ~ 11/20) Regular Kerosene Diesel oil Above prices are before tax. Reference (November 21 - November 27 actual data) Products Spot Futures Average Gasoline Kerosene Diesel oil Fuel Oil A -0.3 (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 November 27 rose by 1.0 yen/l from to another year-to-date high of yen/l for gasoline, by 0.9 yen/l to yen/l for diesel oil and by 1.0 yen/l to 83.4 yen/l for kerosene. The gasoline price rewrote a yearto-date high for the eighth straight week. The gasoline and diesel prices increased for the 11th straight week. The kerosene price also rose for the 11th consecutive week on an 18-liter tank basis. Gasoline prices increased in 46 of Japan s 47 prefectures and decreased only in Tokushima. The lowest gasoline price among the prefectures was yen/l in Saitama Prefecture (up 0.1 yen/l from ). The second lowest was yen/l in Chiba (up 0.3 yen/l). The highest price was yen/l in Okinawa (up 0.2 yen/l). Posting the largest price hike of 4.6 yen/l was Kochi (141.0 yen/l). As crude oil cost decreased last week, Motouri companies cut wholesale prices by yen/l for petroleum products. The average retail gasoline price rose for the 11th straight week., crude oil cost increased slightly as crude oil price hikes were largely offset by the yen s appreciation against the dollar. Motouri companies kept their wholesale prices unchanged for gasoline and diesel oil. For kerosene, they left prices unchanged or raised them by 0.5 yen/l. Retail gasoline prices are likely to level off next week (as of December 4). Retail kerosene prices, which have remarkably failed to reflect wholesale price changes despite the advent of the demand season, are expected to rise slightly. (Published by ANRE)[Weekly Previous week (11/27) (11/20) 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 (2017/9/19 ~ 2017/11/27) ( /L ) 75.0 Left scale: retail prices Retail price RIM (offshore barge) RIM (onshore) TOCOM/ futures, Chubu TOCOM/ futures, Tokyo Bay 50.0 Right scale: RIM and futures prices /19 9/25 10/2 10/10 10/16 10/23 10/30 11/6 11/13 11/20 11/27 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. 34 for 2017) will be announced at 14:00 on December 15. 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