Gasoline (Unit: 1,000 kl, yen/l) Gasoline (retail) Production 5/27 ~ 6/ Imports n.a. n.a. n.a Shipments Exports

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1 Overview June 15, 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 May week moved within a far weaker range between $66.73 per barrel and $70.71/bbl. On May 31, the July contract turned down as prospects for a tighter supply-demand balance receded on ly EIA (Energy Information Administration) report that gasoline inventories posted ly increase of 500,000 barrels against a market-forecast decline of 1.4 million barrels, with middle distillate inventories showing a rise of 600,000 barrels against a market-forecast fall of 1.3 million barrels, although crude oil inventories logged a drop of 3.6 million barrels against a market-forecast decrease of 500,000 barrels. The EIA report came one day behind normal schedule due to the Memorial Day holiday. Another contributor to the downturn was a media report quoting a Gulf source close to Saudi Arabia as saying that OPEC (Organization of the Petroleum Exporting Countries) and non-opec oil producing countries would have to gradually readjust production to prevent a supply shortage while continuing their joint production cut until the end of this year. The key contract closed at $67.04/bbl, down $1.17/bbl from the previous day. On June 1, the key contract declined further as Baker Hughes reported that the number of operating U.S. oil-drilling rigs rose by two from to 861, the highest since March 2015, and as May U.S. oil production hit a record million barrels per day as reported by the EIA on the previous day. Another factor behind the decline was the dollar s appreciation against the euro that came on robust U.S. jobs data and made crude oil futures relatively higher. The July contract lost $1.23/bbl to $65.81/bbl. On June 4, the July contract dropped in the wake of the previous week s downtrend as crude oil inventories at the WTI delivery point of Cushing increased by 210,000 barrels from. The key contract lost $1.06/bbl to $64.75/bbl, the lowest in some two months since early April. On June 5, the July contract rallied as market players felt growing geopolitical risks in the Middle East on a media report that Iran s supreme leader Ayatollah Ali Khamenei ordered preparations for resuming the enrichment of uranium. The key contract gained $0.77/bbl to $65.52/bbl. On June 6, the July contract turned down on a new weekly EIA report that U.S. crude oil inventories posted ly increase against a market forecast drop, while petroleum products inventories rose faster than forecast in the market. However, crude oil futures prices were supported by a media report that Venezuela was considering invoking a force majeure clause for some crude oil exports. The key contract fell by $0.79/bbl to $64.73/bbl. The Asian benchmark crude oil of Dubai for July delivery on the Tokyo market moved in a range between $73.40/bbl and $77.00/ bbl in the May week. It closed at $75.20/bbl on May 31, at $75.00/bbl on June 1, at $74.10/bbl on June 4, at $73.20/bbl on June 5 and at $73.90/bbl on June 6. On the foreign exchange market in the May week, the dollar moved within a slightly weaker range between and yen. It changed hands at yen in late trading on May 31, at yen on June 1, at yen on June 4, at yen on June 5 and at yen on June 6. According to preliminary 10-day trade statistics released by the Ministry of Finance on June 7, the average crude oil import CIF price in the May period stood at 49,011 yen/kl (kiloliter), up 2,424 yen/kl from the previous 10-day period. In dollars, the price was $71.21/bbl, up $2.68/bbl. The average exchange rate was yen to the dollar. Wholesale prices that major Motouri (petroleum products wholesalers) applied to the second week of June were lowered by yen/l (liter) for gasoline, diesel oil and kerosene (heating oil). Crude oil acquisition cost fell as crude oil price drops coincided with the yen s appreciation against the dollar. Japan s average retail price on June 4 rose by 1.1 yen/l from for gasoline, by 1.0 yen/l for diesel oil and by 13 yen for kerosene on an 18-liter tank basis. The gasoline price rose for the seventh straight week to the highest level since January 15, 2014, rewriting this year s high for the sixth consecutive week. Diesel oil and kerosene prices (on an 18-liter tank basis) also increased for the seventh straight week. While crude oil cost increased in the first week of June, Motouri companies left their wholesale prices unchanged or lowered them by 1.0 yen/l for gasoline, diesel oil and kerosene. Crude oil Crude oil runs (1,000 kl) 5/27 ~ 6/2 2, Topper capacity utilization rate (%) ($/b) [NYMEX]WTI crude oil [TOCOM]MiddleEastern crude oil Crude oil inventories (1,000 kl) 6/2 13, Middle Eastern crude oil (TOCOM) WTI crude oil (NYMEX) Crude oil import CIF price 1Crude oil import CIF price 2Yen-dollar exchange rate ($/bbl) ($/bbl) ($/bbl) Mid May (yen/kl) 49,011 2,424 11,169 (yen/dollar) TTS exchange rate (yen/dollar)

2 Gasoline (Unit: 1,000 kl, yen/l) Gasoline (retail) Production 5/27 ~ 6/ Imports n.a. n.a. n.a Shipments Exports Inventories 6/2 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 5/29 ~ Futures [front-month contract/closing price] Tokyo Bay) 5/29 ~ Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published by ANRE) /12 4/10 5/9 Diesel oil (Unit: 1,000 kl, yen/l) Diesel oil (retail) Production 5/27 ~ 6/ Imports n.a. n.a. n.a. Shipments Exports Inventories 6/2 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 5/29 ~ Futures [front-month contract/closing price] Tokyo Bay) 5/29 ~ Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published by ANRE) /12 4/10 5/9 Kerosene (Unit: 1,000 kl, yen/l) Kerosene (retail) Production 5/27 ~ 6/ Imports n.a. n.a. n.a Shipments Exports Inventories 6/2 1, Gyoten (spot) [4-district average lorry rack price] (RIM) 5/29 ~ Futures [front-month contract/closing price] Tokyo Bay) 5/29 ~ Chubu) 85.0 Retail prices [weekly (published by ANRE) /12 4/10 5/9 2

3 Relevant Information Overseas crude oil prices 1 On June 6, the most frequently traded WTI crude futures contract on NYMEX firmed in the morning on a media report that Venezuela, plagued with an economic crisis, was considering invoking a force majeure clause for some crude oil exports. Later, however, it turned down as market players recognized U.S. oil oversupply on the weekly EIA report that U.S. crude oil inventories posted ly increase of 2.1 million barrels against a market-forecast decrease of 1.8 million barrels, while gasoline and middle distillate inventories recorded respective increases of 4.6 million barrels and 2.2 million barrels, far faster than market-forecast rises. Another factor behind the turndown was a media report that oil ministers from Saudi Arabia and other Persian Gulf oil producing countries met in Jeddah and discussed the relaxation of the joint oil production cut by OPEC and non-opec oil producing countries. The July contract finished at $64.73/bbl, down $0.79/bbl from the previous day. The August contract lost $0.76/bbl to $64.70/bbl. According to the EIA, the average U.S. retail price of gasoline as of June 4 fell by 2.2 cents per gallon from to $2.940/gal (85.8 yen/l). The average diesel oil price decreased by 0.3 cents/gal to $3.285/gal (95.9 yen/l). The gasoline price decreased for the first time in four weeks, while the diesel price declined for the first time in 11 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 May 27-June 2 week stood at 680,000 bpd, down 56,000 bpd from the previous week (total capacity remained at 3,519,000 bpd). Crude oil throughput in the week decreased by 58,000 kl from the previous week to 2,988,000 kl., it declined by 72,000 kl. The topper capacity utilization rate stood at 76.3%, down 1.5 points from the previous week and down 1.8 points from. Output increased from the previous week for Fuel Oil A and C and decreased for other petroleum products. Output was down 3.2% for gasoline, down 13.2% for jet fuel, down 51.0% for kerosene, down 1.2% for diesel oil, up 7.6% for Fuel Oil A and up 17.1% for Fuel Oil C. Fuel Oil C imports in the week totaled 69,000 kl, down 17,000 kl from the previous week. Diesel oil exports aggregated 95,000 kl, up 5,000 kl. Shipments (excluding imports) in the week increased from the previous week for jet fuel and Fuel Oil C and decreased for other petroleum products., shipments expanded for jet fuel, diesel oil and Fuel Oil C and dropped for others. Gasoline shipments decreased by 9.3% from the previous week to 805,000 kl for the first drop in two weeks, remaining below 1 million kl for 10 weeks on end. Shipments totaled 117,000 kl for jet fuel (up 30.7% from the previous week), 86,000 kl for kerosene (down 36.2%), 617,000 kl for diesel oil (down 15.3%), 145,000 kl for Fuel Oil A (down 29.4%) and 198,000 kl for Fuel Oil C (up 6.2%). Kerosene (heating Oil) Previous week (5/27 ~ 6/2) (5/20 ~ 5/26) Gasoline Jet fuel Diesel oil Fuel oil A Fuel Oil C Total 1,968 2,229 (Unit: 1,000 kl) -82 (-9%) 30 (34%) -49 (-36%) -112 (-15%) -60 (-29%) 12 (6%) -261 (-12%) 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 June 2 decreased from for jet fuel and increased for other petroleum products. a year, inventories increased for kerosene and Fuel Oil C and decreased for others. Gasoline inventories totaled 1,854,000 kl, up 89,000 kl from and down 130,000 kl from. Kerosene inventories totaled 1,518,000 kl, up 6,000 kl from and up 168,000 kl from. Diesel oil inventories totaled 1,470,000 kl, down 7,000 kl from and down 108,000 kl from. Fuel Oil A inventories totaled 776,000 kl, down 15,000 kl from and down 41,000 kl from. Fuel Oil C inventories totaled 2,105,000 kl, up 14,000 kl from and up 29,000 kl from. (6/2) (5/26) Gasoline 1,854 1,765 Jet fuel 1,001 1,062 Kerosene (heating Oil) Previous week 1,518 1,512 Diesel oil 1,470 1,463 Fuel oil A Fuel Oil C 2,105 2,091 (Unit: 1,000 kl) 89 (5%) -61 (-6%) 6 (0%) 7 (0%) 15 (2%) 14 (1%) Total 8,724 8, (0.8%) 3

4 3 Petroleum products wholesale prices in Japan (1) Wholesale price revision trend In the May 29-June 4 week, crude oil cost apparently posted a sharp decline from the previous week as crude oil price drops coincided with the yen s appreciation against the dollar. Onshore cargo spot prices between May 29 and June 4 rose and fell slightly in a yen/l range for gasoline, almost leveled off in a yen/l range for diesel oil and fluctuated and fell slightly in a yen/l range for kerosene. Offshore barge spot prices in the week rose and leveled off in a yen/l range for gasoline, increased in a yen/l range for diesel oil and rose in a yen/l range for kerosene. The key futures price in the week wildly fluctuated and rose slightly in a yen/l range for gasoline, rose in a yen/l range for diesel oil and wildly fluctuated and rose in a yen/l range for kerosene. Motouri companies raised 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 products prices, futures prices fell for gasoline, diesel oil and kerosene. Onshore cargo and offshore barge spot prices were mixed. The latest onshore cargo spot price (the average onshore rack price for four districts -- Chiba, Kawasaki, Chukyo and Hanshin -- for the May 29-June 4 week) that influences Motouri s wholesale prices applied to the second week of June (June 7-13) leveled off from the previous week for gasoline, rose by 0.1 yen/l for kerosene and fell by 0.1 yen/l for diesel oil. The average offshore barge spot price in Tokyo Bay dropped by 0.6 yen/l for gasoline, rose by 0.2 yen/l for kerosene and fell by 0.7 yen/l for diesel oil. The key futures price fell by 1.9 yen/l for gasoline, by 1.1 yen/l for kerosene and by 0.2 yen/l for diesel oil. Crude oil cost decreased sharply as crude oil price drops coincided with the yen s appreciation against the dollar. For the second week of June, 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] (5/29 ~ ) (5/22 ~ 5/28) Regular Kerosene Diesel oil (TOCOM) [Front-month contract/closing Previous week price] [Average] (5/29 ~ ) (5/22 ~ 5/28) Regular Kerosene Diesel oil Above prices are before tax. Reference (May 29 - June 4 actual data) Products Spot Futures Average Gasoline Kerosene Diesel oil Fuel Oil A Retail prices of petroleum products in Japan (Source) Spot: RIM 4-district average lorry rack price (Chiba, Kawasaki, Chukyo, Hanshin) Futures: TOCOM average offshore barge spot price for Keihin District The average retail service station price as of June 4 went up by 1.1 yen/l from to yen/l for gasoline, by 1.0 yen/l to yen/l for diesel oil and by 0.7 yen/l to 92.3 yen/l for kerosene (on an 18-liter tank basis, the kerosene price rose by 13 yen to 1,662 yen). All these prices rose for the seventh straight week. Gasoline prices increased in 43 of Japan s 47 prefectures, leveled off in one (Tottori) and dropped in three (Mie, Kagawa and Toyama). The lowest gasoline price among the prefectures was yen/l in Tokushima Prefecture (up 0.8 yen/l from ). The second lowest was yen/l in Saitama (up 1.7 yen/l). The highest price was yen/l in Nagasaki (up 2.3 yen/l). Posting the largest price hike of 5.2 yen/l was Kochi (153.9 yen/l). Logging the largest fall of 0.3 yen/l was Mie (151.8 yen/l). While crude oil cost fell substantially last week, Motouri companies lowered their wholesale prices by yen/l for gasoline, diesel oil and kerosene. Retail gasoline prices rose for the seventh straight week. Crude oil cost decreased substantially this week as crude oil price drops coincided with the yen s appreciation against the dollar. Retail gasoline prices are expected to fall slightly next week (as of June 11). (Published by ANRE)[Weekly Previous week () (5/28) 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 (2018/3/26 ~ 2018/) ( /L ) 90.0 Left scale: retail prices Retail price RIM (onshore) RIM (offshore barge) TOCOM/ futures, Chubu 60.0 TOCOM/ futures, Tokyo Bay Right scale: RIM and futures prices /26 4/2 4/9 4/16 4/23 5/1 5/7 5/14 5/21 5/28 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. 10 for 2018) will be announced at 14:00 on June 22. 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