CERI Commodity Report Crude Oil

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However, the North American pipeline infrastructure needs to catch up with continuously changing supply, specifically, rising production from Canada, as well as expanding output from the Bakken and

1 CERI Commodity Report Crude Oil May 2013 Could Canadian Oil Sands Replace Venezuelan Imports in the US Gulf of Mexico? Canadian oil sands could play an ever-increasing, long term role in supplying the US markets for many years to come (see Figure 1). However, the North American pipeline infrastructure needs to catch up with continuously changing supply, specifically, rising production from Canada, as well as expanding output from the Bakken and other formations in the US. Presently, Canadian and Bakken supplies are directed to the US Midwest market, a regional hub that is heavily saturated, creating wide differentials (see CERI Commodity Report Crude Oil, November 2012) between Canadian heavy crudes and WTI. Figure 1: US Imports of Crude Oil and RPPs ('000 b/d) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Source: EIA Despite declining US crude imports, Canadian exports to the US are on the rise US Imports of Crude and RPPs CDN Exports (as % of Total US Imports) 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. For more information about CERI, please visit our website at 30% 25% 20% 15% 10% 5% 0% An important uncertainty about the future of the Canadian oil sands in the US is whether the US government will allow Canada to export oil sands bitumen in significantly larger volumes. The proposed Keystone XL pipeline would provide the first significant pipeline connection between Canada and the US Gulf Coast. Such an expansion could encourage higher production and utilization of North American crude in the US market. A more dynamic pipeline system that boosts continental oil supply would be a big plus for American consumers and US energy security. If approved, TransCanada's Keystone XL would carry 830,000 barrels a day (b/d) of heavy oil from Canada's oil sands deposits to the US Gulf Coast starting in the second half of 2015, at the earliest. 1 The US Gulf Coast refining sector has a capacity to consume large volumes of heavy crudes (similar to the quality of oil sands supply, namely dilbit). The volume of heavy crude imports to the region has been increasing steadily from 2000 onwards. 2 Refineries on the Gulf Coast have a high concentration of specialized refining equipment designed to refine low quality heavy sour oil into high quality petroleum products such as low sulfur diesel and gasoline. Gulf Coast refiners have imported heavy sour oil from Mexico, Venezuela, Kuwait and other distant sources for years, but the prospect of increasing oil sands production, the primary product of which is a heavy sour blend known as dilbit, triggered a new wave of investments in specialized refining equipment over the past five years. Refineries in Port Arthur and Houston, Texas in particular, invested in this equipment in anticipation of the arrival of Keystone XL, the terminus of which is planned nearby. 3 As the debate over approval of the pipeline continues, one voice has been notably missing from the conversation Venezuela. The market for Venezuelan heavy oil production has historically been the US. In many ways, it remains a natural trading partner for the US, which is relatively nearby, reducing transportation costs, and has the refining configuration and capacity that matches Venezuelan output. Relevant Independent Objective

2 Page 2 Since the start of 2011, Venezuelan exports of similar heavy oil to the same Gulf Coast refineries that would be hooked up to the Keystone XL system have averaged 850, ,000 b/d (see Figure 2). In other words, Keystone XL could, in theory, provide enough Canadian heavy oil to displace nearly all of Venezuela's present exports to the US at recent levels. Lobbying from Canadian officials has reflected that. During a question period in the House of Commons in late March, Minister of Natural Resources, Joe Oliver, stated "Venezuela may be a major supplier of heavy crude to the US, but it has also threatened to cut supplies five times in as many years. That is not a reliable partner. That is not a stable source of oil." 4 However, despite more than a decade of strained political ties, the countries' (US and Venezuela) energy trade has remained robust. It is in neither country's interest to see supplies cut off, but Minister Oliver's remarks underline how high the stakes have become for Canada as a US decision on Keystone XL looms. Figure 2: US Gulf Coast Imports ('000b/d) Source: EIA Gulf Coast (PADD 3) Imports from Venezuela of Crude Oil and Petroleum Products Gulf Coast (PADD 3) Imports from Mexico of Crude Oil and Petroleum Products Yet in the face of such aggressive lobbying from Canada and an apparent direct competition to its primary market, Venezuela has been silent on Keystone XL. The prolonged leadership crisis, which has put most issues including oil policy on the backburner, may be one reason. Another potential explanation is that Venezuela is too busy making plans to develop its own extra-heavy oil deposits in the Orinoco Belt, one of the largest oil deposits in the world, and it will need a market for it. State Oil Company, Petróleos de Venezuela, S.A. (PDVSA) has outlined plans to invest $257 billion from 2013 to 2019 to double total oil production to 5-6 million b/d, nearly all of which is expected to come from the Orinoco Belt (3 million b/d). 5 Independent estimates though suggest production would reach only 2.6 million b/d. Currently, Orinoco production has been flat at 1.2 million b/d over the last few years. 6 There has been little progress made on the tens of billions of dollars worth of investment needed to build the extensive upgrading and pipeline infrastructure to process and transport the Orinoco's extra-heavy crude. According to the International Energy Agency (IEA), Venezuela is expected to add a total net 300,000 b/d of new production by 2018, all of which is expected to come from the Orinoco. 7 If Keystone XL is approved, a key issue will be how the economics of Venezuelan extra-heavy oil and Canadian oil sands compare in the US Gulf Coast. An oil to oil comparison is difficult, but Venezuela would likely hold an edge on break-even supply costs. In its 2013 report, Oil Sands Supply Costs and Development Projects ( ) 8 CERI estimated new oil-sands projects with WTI equivalent break even prices between $58 per barrel and $99 per barrel depending on the method used to extract the bitumen. Costs for running existing projects are lower. Breakeven estimates for new Orinoco projects typically range from $45/bbl to $65/bbl, though a government take of more than 90 percent pushes this figure higher. 9 The development of Carabobo projects (part of the Orinoco Belt) would need oil prices north of $80/bbl to break even, though tweaks to the fiscal regime would bring this down substantially. 10 Transportation costs, though, could tip things in Canada's favour if Keystone XL is built because piping oil is cheaper than shipping it on water. 11 But Venezuela also has a solid position on the Gulf Coast to ensure demand for its crude. Citgo, a subsidiary of PDVSA, owns and operates 750,000 b/d of refining capacity across three refineries in the region. The company sources crude from other heavy oil suppliers such as Brazil and Mexico, as well as Venezuela. But, if need be, Citgo would prioritize supplies from PDVSA. Despite Venezuela's position in the Gulf Coast, Venezuela wants to diversify its markets away from the US and it has become a central pillar of the country's oil policy. This was the case before Canada emerged as a rival and will likely continue to be a key objective, especially with the election of Nicolas Maduro, Hugo Chavez's hand-

3 Page 3 picked successor, to the presidency in April. At the core of that strategy is Venezuela's growing relationship with China, which is supported by nearly $40 billion in oil-forloan deals. It has not been a smooth transition. China has been frustrated by the slow pace of development in the Orinoco belt, while Venezuelan officials have been angered to see Chinese companies sell Venezuelasourced crude for a profit on the open market. Yet the relationship is deepening as China is set to overtake the US as the largest buyer of Venezuelan oil. PDVSA and China National Petroleum Corporation, for example, are building a 400,000 b/d refinery in China's Guangdong province to process heavy 16 API Venezuelan crude. The expansion of the Panama Canal to allow the largest crude tankers to pass through it should increase the countries' oil trade. Venezuela has also proposed a joint project to build a pipeline across Colombia to transport heavy oil to the Pacific coast. The country s oil minister Rafael Ramirez said oil exports to China could rise to 1 million b/d by As more Venezuelan crude will go to Chinese buyers, less will make its way to the Gulf Coast. Recently, Venezuela's crude exports to the US have been on a steady decline (see Figure 2). Declining US crude imports could accelerate Venezuela's desire to go east. Some analysts, though, have predicted that there will still be an important role for heavy oil imports into the Gulf Coast even as overall US import demand falls. 13 Refiners in the region, the IEA and others have argued, will still need heavy crudes they can blend with surplus light oil and condensate supplies from the nearby Eagle Ford shale that are too light for the Gulf Coast's heavy and sour oil refineries to process on their own. That would be good news for heavy oil exporters to the US, but Canada's bid for a market share is setting up a head-to-head competition with Venezuela and others in the Gulf. Endnotes 1 Financial Post. TransCanada warns of more delays and higher costs on Keystone. April 26, Accessed on June 20, lsa=cfcc-9bd2 2 IHS CERA. The Role of the Canadian Oil Sands in the US Market. June The Price of Oil. U.S. oil boom threat to tar sands much greater than State acknowledges. May 16, Accessed on June 24, Reuters. Canada swipes at Venezuela in push for U.S. approval of Keystone. April 18, Accessed on June 24, Petroleum Economist. Canada looks to Venezuela's territory in the US Gulf Coast. June 14, Accessed on June 20, Article/ /Canada-looks-to-Venezuelas-territory-in-the- US-Gulf-Coast.html#ixzz2X9lFnPdA 6 New PDVSA Contact. The Plan for Sowing the Oil. Accessed on June 20, database/fichero/publicacion/925/19.pdf 7 IEA, Oil Medium Term Market Report Market Trends and Projections to CERI s reports are public and can be downloaded at 9 Petroleum Economist. Canada looks to Venezuela's territory in the US Gulf Coast. June 14, Accessed on June 20, Article/ /Canada-looks-to-Venezuelas-territory-in-the- US-Gulf-Coast.html#ixzz2X9lFnPdA 10 Goldman Sachs. 330 Projects to Change the World. April 5, Accessed on June 24, sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0cc oqfjaa&url=http%3a%2f%2fwww.energyventures.no%2fkc% 2Fcontent%2Fdownload%2F1647%2F10000%2Fversion% 2F&ei=sYnIUcbpO- O1iwKA1IGIBA&usg=AFQjCNHokk92R1iWHMqHp5- FSf6dGigtNA&bvm=bv ,d.cGE 11 This is the case with KXL and shipping by water from Venezuela to the Gulf. However, depending on the distance and the capacity of the crude carrier, it might not hold true for all instances. 12 The Wall Street Journal. Venezuela Sees Rising Oil Exports To China; PDVSA Revenue Jumps. February 9, Accessed on June 20, html 13 IHS CERA. The Role of the Canadian Oil Sands in the US Market. June 2011.

4 Page 4 US$/bbl Spot Crude Prices Differential WTI Brent US$/bbl US$/bbl WTI - Edmonton Light Price Differentials Differential WTI Edmonton Light Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun May-07 May-08 May-09 May-10 May-11 May-12 May-13 Spot Prices WTI Brent Edm.Light H.Hardisty Year-to-Date Quarter-to-Date June 10, SOURCE: EIA. SOURCE: EIA. US$/bbl WTI - Hardisty Heavy Price Differentials Differential WTI Hardisty Heavy US$/bbl NYMEX Crude Forward Curve 12 months May-07 May-08 May-09 May-10 May-11 May-12 May Apr May Jun SOURCE: NRCan, EIA. SOURCE: EIA, CERI.

5 SOURCE: EIA, CERI. SOURCE: NRCan. Page 5 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal 3.50 CDN/US$ RBOB Gasoline Heating Oil Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun May-07 May-08 May-09 May-10 May-11 May-12 May-13 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date June 10, Oil Demand Global in Selected Oil Demand Countries US Products Demand May May 2013 Y-on-Y change MMbpd % % 15% % 10% 70 5% 60 49% 50 0% 40 48% -5% % 46% 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13-10% -15% Total Gasoline Jet Fuel Distillate Residual Propane Other Total OECD Total Non-OECD non-oecd Demand share 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 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 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 1Q13 2Q13 3Q13 4Q13 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 4Q12 1Q13 2Q13 3Q13 4Q13 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region Apr-10 Apr-11 Apr-12 Apr-13 OECD North America OECD Europe OECD Pacific

7 Page 7 MMb US Commercial Stocks April 26 - May 31, 2013 Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 1Q12 2Q12 3Q12 4Q12 1Q13 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 Mar-13 Apr-13 May-13 Mar-13 Apr-13 May-13 Saudi Arabia Iran UAE Kuwait Qatar Nigeria Libya Algeria Ecuador OPEC Iraq Total OPEC WTI Price Projections ($US/barrel) Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 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. -7.2% -8.1% -9.8% -10.1% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. 4.9% 4.8% -4.5% -5.1% 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. -7.6% -7.6% -7.9% -6.6% -5.3% -5.3% -6.4% -6.1% Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Yr-on-Yr Chg. -1.6% -2.3% -3.8% -1.5% 3.2% 3.0% -1.1% -1.4% 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. -6.2% -6.8% -7.5% -5.0% -5.0% -5.0% -4.7% -7.4% -8.7% -4.4% -5.2% -9.8% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg % -13.3% -13.4% -14.7% -14.1% -13.3% -8.9% -14.9% -16.1% -9.1% -14.0% -22.2% 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. -4.2% -5.3% -6.8% -8.0% -8.4% -8.5% -8.0% -7.4% -8.6% -8.7% -4.4% -14.4% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg % -3.8% -3.9% 1.1% 1.2% 1.2% 1.1% 1.4% 1.3% 4.1% 9.1% 6.0% 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. -6.2% -8.6% -4.4% -5.9% -5.1% -14.9% -8.5% -8.4% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Yr-on-Yr Chg % -15.5% -9.1% -4.7% 5.3% -0.4% -12.7% -12.4% 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. -8.4% -5.0% -7.2% -5.1% -2.0% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg. 0.1% -7.0% -6.5% -6.5% -15.0% 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. Jet/Ker. 2 Gasoline 1 Gasoil Resid. 3 Gasoline 1 Gasoil Resid Q Q Q Q Q Yr-on-Yr Chg. -5.4% -10.2% 18.8% -2.9% -3.6% -10.8% -3.5% -5.1% -12.1% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg. -2.6% -7.6% % -6.7% -7.9% -8.1% -5.9% -6.6% -9.0% 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. -2.4% -3.0% -2.4% -5.1% -2.8% -2.4% -3.6% -3.3% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg. -4.7% -6.0% -3.3% -2.6% -8.4% -3.5% -7.3% -5.4% 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. 7.8% -10.3% -13.5% 3.7% 0.0% -2.8% 0.9% -0.4% -2.5% -0.1% -1.5% 0.1% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg. 7.6% -6.0% -7.5% 4.7% 1.0% -1.0% -0.5% -0.2% -1.6% -2.2% -1.6% 0.3% 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 , ,422 2, , ,408 2, , ,413 2,665 1Q , ,388 2,659 2Q , ,010 1,374 2,699 3Q , ,430 2,738 4Q , ,413 2,665 1Q , ,004 1,374 2,663 Yr-on-Yr Chg. 5.9% -0.3% 1.2% -1.1% -5.9% -5.0% 7.6% 13.9% 9.4% 3.9% -1.0% 0.2% 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 , ,394 2,698 Nov , ,004 1,379 2,692 Dec , ,413 2,665 Jan , ,412 2,677 Feb , ,380 2,639 Mar , ,004 1,374 2,663 Apr , ,011 1,377 2,680 Yr-on-Yr Chg. 4.7% 3.1% 2.3% 1.6% -5.7% -4.0% -3.1% 5.8% 1.5% 2.4% -0.2% 0.0% 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. -6.8% -19.9% 2.3% 3.3% -1.3% -3.6% -2.9% 6.2% -0.9% -0.6% 4.2% -4.4% 12.6% May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Yr-on-Yr Chg. -4.4% -18.8% 2.2% 3.6% -2.7% -1.6% -10.1% -2.8% 0.9% -1.1% 4.2% -4.2% 8.7% Quotas Over/Under % -19.8% 23.0% 27.9% 0.0% 23.1% 17.4% -6.1% -4.2% 17.1% 16.3% -7.5% 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. 0.3% -29.5% -3.3% 151.6% 2.0% % -0.7% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 2.0% 40.0% -1.2% 163% -2.5% % 0.2% 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. 9.1% 1.1% -15.7% 16.9% -2.7% 8.5% 3.3% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 9.4% 1.7% -15.9% 9.0% -4.6% 11.8% 5.1% % of Total % 100.0% 1.4% 27.6% 23.7% 25.8% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 14.4% 3.3% -4.9% -1.4% -3.1% 1.3% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 13.2% 4.0% -4.9% -4.6% -0.9% 5.7% % of Total % 28.0% 7.2% 3.6% 12.0% 15.0% 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. -0.8% -1.5% 3.2% -11.8% -0.2% 11.5% 1.1% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. -0.2% -0.9% 2.8% 3.6% 0.5% 14.2% 1.7% 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 , ,794 1, , ,751 1, , ,807 1, Q , ,777 1, Q , ,808 1, Q , ,818 1, Q , ,807 1, Q , ,793 1, Yr-on-Yr Chg. -9.1% 3.8% 1.7% 11.3% -2.4% 0.9% 2.3% -10.9% 1.9% -11.3% 1.8% -4.3% 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, Dec , ,807 1, Jan , ,812 1, Feb , ,791 1, Mar , ,793 1, Yr-on-Yr Chg. -9.1% 3.8% 1.7% 11.3% -2.4% 0.9% 2.3% -10.9% 1.9% -11.3% 1.8% -4.3% 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.

CERI Commodity Report Crude Oil

CERI Commodity Report Crude Oil 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Well Count CERI Commodity