CERI Commodity Report Crude Oil

Transcription

1 CERI Commodity Report Crude Oil October-November 2011 Tight Condensate Markets Create New Pricing Links By Jeff Kralowetz and Justin Amoah* Alberta is short of condensate, and the shortage is likely to grow worse. The soaring demand for condensate as a diluent for heavy bitumen and conventional heavy oil will have oil producers in Alberta scouring global markets for diluent, and those who have not locked in pipeline transport are likely to pay dearly for it. The shortage will also have an effect on the local price of condensate in Edmonton, as prices will have to align with those at the source of the marginal unit of supply: the US Gulf Coast. Alberta s condensate balance is being skewed by both falling domestic production and rising demand. On the supply side, low natural gas prices are reducing the volume of conventional natural gas available to natural gas processing plants, which currently produce about 120,000 bpd of condensate. An estimated 30,000 bpd of diluents is added to that from refineries and upgraders. Multiple recent studies put demand at more than 200,000 bpd. The National Energy Board (NEB) said in its Canada s Energy Future report 1 last month that demand for condensate is likely to grow at 5.7 percent per year in spite of some increased use of synthetic crude to dilute bitumen being sent through pipelines. Multiple forecasts have condensate demand at about 400,000 bpd by 2015, and CERI will have an updated projection of demand levels in its forthcoming Oil Sands Update. The NEB said imports of condensate will likely rise by 10 percent per 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 year, with the import level reaching 668,000 bpd (106,000 m3/d) by Butane, which is also used as a diluent for bitumen, is to see its demand in Alberta rise by 1.7 percent per year, with near-term production also falling, the NEB said. New infrastructure is being added to deliver the higher levels of condensate demand. Enbridge put its 180,000 bpd Southern Lights condensate pipeline from Chicago to Edmonton into service in the third quarter of last year. Pembina started up its 22,000 bpd Mitsue line this summer to bring Albertan condensate to oil sands projects north of Slave Lake, and Inter Pipeline Fund (IPF) is building a 90,000 bpd (expandable to 120,000 bpd) Polaris line to the oil sands. Keyera plans to complete a 20-inch diameter condensate line from its Fort Saskatchewan Condensate System near Edmonton to feed into the IPF Polaris line by the middle of next year. Keyera is also building a connection to the Southern Lights line, and added a condensate storage tank at its Alberta Diluent Terminal this fall. The Access oil sands pipeline, owned by MEG and Devon, has a 16-inch diluent return line that connects to Provident s Redwater and Enbridge s Sherwood Park facilities near Edmonton. But as the Alberta condensate-handling infrastructure is expanded, questions remain about the sources for the increasing demand for imports. At the moment, Canadian National railway says it is hauling about 23,000 b/d of condensate from the Pacific port of Kitimat into northern Alberta. That supply has routinely come from Peru. Southern Lights has been carrying an average 65,000 b/d from Chicago during the January-September 2011 period. Other amounts are arriving by rail from the US NGL hubs of Mt Belvieu, Texas and Conway, Kansas. Ramping up supply from these sources presents some challenges. On the Southern Lights pipeline, for example, tolls for uncommitted shippers are double the toll for the two current committed shippers BP and Statoil. Transportation of diluent is currently considered noneconomical for uncommitted transportation service on Southern Lights compared with rail, Imperial Oil says. 2 Rail shipments from Mt Belvieu to Edmonton are calculated at approximately US$15-16/bbl, while Relevant Independent Objective

2 Page 2 uncommitted shipments on Southern Lights from the US Gulf Coast amount to more than US$17.50/bbl. In addition to enjoying lower tolls, those two companies have the right of first offer on any new capacity on the line. So as demand for northbound condensate transport increases, other companies may find it difficult to secure space on the line. Rail transport capacity out of Conway, Kansas is already reportedly limited primarily by availability of rail cars and loading facilities. Looking to supply avenues from the Pacific, Enbridge s proposed Northern Gateway pipeline from the oil sands producing areas to the port of Kitimat, British Columbia, includes a parallel 193,000 b/d condensate line that could get Peruvian or other Pacific Basin condensate to oil sands producers. But Canadian courts have ruled that nearly 50 First Nations groups many already declared as opponents of the project must be consulted. One group, the Gixtsan, announced a deal in early December to support the line, 3 but denunciations of that deal came immediately from other First Nations groups and even from within the Gixtsan community. Several environmental groups also are arrayed against the Northern Gateway project. Their actions could possibly delay the start-up date of the pipeline operations. Colombia, which has seen its heavy crude production soar, is likely to draw away a lot of Peruvian condensate that might otherwise go to western Canada. And delays or cancellations of oil sands upgrading plans in the Edmonton area will reduce the expected condensate production from that source. Northwest Upgrading, which is targeted for startup in 2014, is still expected to contribute about 32,000 b/d of condensate once it reaches full throughput levels. 4 In a supply-constrained market, spot prices will be determined by the costs associated with getting the marginal unit of condensate to the Edmonton pricing hub. This price should be revealed in spot market transactions at Edmonton, if there is transparent reporting of activity on that market. Until last year, one key measure of spot market condensate value was British Petroleum s posted prices. But the largest provider of those prices discontinued its posting in the summer of Some in the market use an average of broker index prices as a proxy for spot market value. But it is unclear how much spot trading is done through brokers as opposed to directly between buyers and sellers. And as the market share of any given broker tends to be fluid, it is difficult to say which broker or combination of brokers might provide the most representative proxy price for the spot value of condensate at Edmonton. There does not yet exist a third-party price index that can claim to capture consistently the majority of the brokered and nonbrokered spot trade of condensate at Edmonton. Price signals from market hubs farther afield may offer useful price signals, particularly since the marginal Edmonton barrel is likely to come from the Mt Belvieu area on the US Gulf coast. Figure 1: Condensate Prices The chart above shows that the Argus daily price assessment for Edmonton condensate tends to track its counterpart at Mt Belvieu much more closely than condensate at Conway, Kansas. In the chart below, it becomes clear that Edmonton condensate values track the US Gulf sweet crude benchmark, LLS, much more closely than inland crude benchmark WTI. This is partly because landlocked WTI currently has limited outlets to global markets, causing its price to dislocate from Brent, LLS and other coastal crudes for much of But proposed oil pipeline projects promise to rectify some of that dislocation beginning next year, and indeed WTI discounts to Brent have narrowed from nearly $30/bbl in October to about $9/bbl in early December. CERI Commodity Report - Crude Oil

3 Page 3 Figure 2: Edmonton Condensate Values Track LLS Rather than WTI Endnotes 1 National Energy Board, Canada s Energy Future: Energy Supply and Demand Projections to 2035, November FERC Public Hearing. 3 Calgary Herald. Gitxan First Nation takes ownership stake in Enbridge s Northern Gateway pipeline project. December 2, National Buyer Seller Forum. nbsf_presentation_pdfs/macgregor.northwestupgrading.pdf. Accessed on December 6, 2011 A final consideration in the pricing of condensate may be decisions by the industry on quality specifications. Currently, producers of condensate are able to include up to 5 percent butane in their condensate without penalty. But given that bitumen producers are already blending butane into their bitumen before adding diluent, the butane content of condensate could become a greater concern. The CRW condensate pool at Edmonton has routinely had butane content well below 5 percent, but market incentives could change that in coming months and years. There is also a concern about naphtha content in the condensate stream, as potential US Gulf buyers of Canadian blended bitumen are thought to have a less favourable view of high naphtha content in the bitumen blends they receive than midcontinent refineries where most Canadian blended bitumen is currently processed. *Jeff Kralowetz is Canada Country Manager for Argus Media, based in Calgary. Justin Amoah is Argus crude oil and condensate market reporter for western Canada. Argus is a UK-headquartered global energy commodity pricing and news service that provides daily price assessments for natural gas, crude oil, natural gas liquids and condensate in western Canada. Jeff can be reached at jeff.kralowetz@argusmedia.com Relevant Independent Objective

4 Page 4 US$/bbl Differential WTI Brent Spot Crude Prices US$/bbl US$/bbl WTI - Edmonton Light Price Differentials Differential WTI Edmonton Light Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Spot Prices WTI Brent Edm.Light H.Hardisty Year-to-Date Quarter-to-Date November 28, SOURCE: EIA. SOURCE: EIA. US$/bbl WTI - Hardisty Heavy Price Differentials Differential WTI Hardisty Heavy US$/bbl NYMEX Crude Forward Curve 12 months Nov Sep Oct Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov SOURCE: NRCan, EIA. SOURCE: EIA, CERI. CERI Commodity Report - Crude Oil

5 SOURCE: EIA, CERI. SOURCE: NRCan. Page 5 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal 4.00 CDN/US$ 1.55 RBOB Gasoline Heating Oil Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date November 28, Oil Demand Global in Selected Oil Demand Countries US Products Demand November November 2011 Y-on-Y change MMbpd % % 10% % 49% 5% 0% -5% 50-10% 40 48% -15% % 46% 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12-20% -25% -30% 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 Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 non-opec Supply OPEC Supply non-opec Share of Global Supply Canadian Oil Production by product Mbpd 4,000 3,500 3,000 2,500 2,000 1,500 1, Q11 3Q11 4Q11 1Q12 2Q12 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 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Mbpd 3,000 2,500 2,000 1,500 1, US Oil Production by region 2Q11 3Q11 4Q11 1Q12 2Q12 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region Sept-08 Sept-09 Sept-10 Sept-11 OECD North America OECD Europe OECD Pacific CERI Commodity Report - Crude Oil

7 Page 7 MMb US Commercial Stocks October 28 - November 25, 2011 Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 2Q10 3Q10 4Q10 1Q11 2Q11 SOURCE: EIA Weekly Petroleum Status Report. SOURCE: IEA Oil Market Report. Relevant Independent Objective

8 Page 8 World Supply and Demand Balance (MMbpd) Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 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 Aug-11 Sep-11 Oct-11 Aug-11 Sep-11 Oct-11 Saudi Arabia Iran UAE Kuwait Qatar Nigeria Libya Algeria Ecuador OPEC Iraq Total OPEC WTI Price Projections ($US/barrel) Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 High Price Case Reference Case Low Price Case CERI Commodity Report - Crude Oil

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. 19.7% 20.2% 24.8% 23.0% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Yr-on-Yr Chg. 5.9% 7.4% 3.4% 1.5% 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. 51.5% 48.8% 45.4% 44.1% 51.3% 48.7% 47.4% 43.5% Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Yr-on-Yr Chg. 25.6% 27.6% 27.1% 24.1% 37.1% 37.3% 30.9% 26.7% 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). CERI Commodity Report - Crude Oil

11 Page 11 A3: World Crude Oil Contract Prices (FOB, $US per barrel) Saudi U.A.E. Oman U.K. Norway Russia Venez. Colombia Ecuador Mexico Nigeria Indon. Arab Lgt Dubai Oman Brent Ekofisk Urals 1 T.J. Light C.Limon Oriente Isthmus Bonny Lgt Minas Q Q Q Q Q Yr-on-Yr Chg. 45.3% 44.5% 44.5% 46.2% 47.5% 48.0% 40.1% 44.8% 47.1% 40.2% 47.0% 50.1% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 35.4% 33.8% 28.8% 34.5% 32.1% 36.4% 38.0% 30.8% 32.1% 38.0% 35.1% 36.4% Notes: 1. Urals is Delivered price at Mediterranean. Contract prices are based on prices at the end of each month. Source: Weekly Petroleum Status 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. 54.1% 43.0% 45.0% 14.0% 14.7% 15.4% 14.0% 14.5% 15.7% 17.3% 23.3% 16.4% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 42.1% 47.4% 49.9% 15.1% 16.1% 16.5% 15.1% 15.3% 16.8% 17.6% 24.2% 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. 45.3% 44.5% 40.2% 46.3% 33.9% 26.3% 15.4% 14.7% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 35.4% 25.8% 38.0% 30.2% 23.9% 31.8% 16.5% 16.1% Notes: 1. Edmonton Light Sweet. 2. Hardisty Heavy. Based on contract prices at the end of each month. Sources: EIA Weekly Petroleum Status 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. 17.7% 47.6% 45.0% 47.5% 47.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 5.6% 32.3% 29.6% 32.6% 33.1% 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. Spot prices are average daily prices over a specific timeframe. Source: International Energy Agency (IEA) Oil Market Report. CERI Commodity Report - Crude Oil

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. 46.2% 46.5% 45.1% 46.1% 44.8% 48.1% 50.9% 44.5% 47.9% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 28.6% 31.6% 37.8% 26.8% 31.4% 38.0% 36.2% 30.6% 39.7% 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. 46.0% 46.8% 44.0% 44.7% 46.2% 44.1% 33.3% 41.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 28.1% 31.7% 30.7% 29.8% 31.9% 31.4% 30.5% 32.1% 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. CERI Commodity Report - Crude Oil

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. 2.6% -1.6% -11.5% 1.2% -3.6% -0.5% 0.1% -0.9% 10.5% -12.4% 3.6% 1.4% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 1.3% -3.8% 1.7% 0.2% -2.3% 0.6% 0.5% -0.2% 9.0% -11.1% 3.0% 1.2% 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 , ,432 2, , ,431 2, , ,422 2,664 3Q , ,467 2,742 4Q , ,422 2,664 1Q , ,375 2,631 2Q , ,396 2,676 3Q , ,438 2,684 Yr-on-Yr Chg. -6.9% -2.9% -3.6% -3.4% -2.8% -2.8% 3.3% 4.8% 4.6% -4.1% -1.9% -2.1% Sep , ,467 2,742 Oct , ,010 1,448 2,759 Nov , ,438 2,716 Dec , ,422 2,664 Jan , ,461 2,725 Feb , ,405 2,660 Mar , ,375 2,631 Apr , ,377 2,659 May , ,396 2,687 Jun , ,396 2,676 Jul , ,433 2,695 Aug , ,438 2,695 Sep , ,438 2,684 Yr-on-Yr Chg. -6.9% -2.9% -3.6% -3.4% -2.8% -2.8% 3.3% 4.8% 4.6% -4.1% -1.9% -2.1% 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. 14.1% -4.3% 8.6% 11.3% 2.5% 11.2% 5.1% -97.4% 1.6% -1.2% 6.5% 1.4% 14.1% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 9.9% -3.3% 7.7% 15.2% 1.3% 12.7% -8.2% -77.6% 1.6% 2.4% 6.4% 0.9% 11.6% Quotas Over/Under % 5.7% 13.1% 19.4% 11.0% 25.1% 21.0% -76.2% 7.5% 13.2% 16.3% 9.9% 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. 0.9% 28.4% -3.3% -17.9% -1.1% -63.9% -0.9% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Yr-on-Yr Chg. 2.0% 139.4% -3.5% -122% -2.7% -53.8% -0.7% 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. CERI Commodity Report - Crude Oil

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. 4.5% -3.4% -15.9% 7.0% -6.3% 9.8% -1.2% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Yr-on-Yr Chg. 3.1% -3.6% -15.4% 6.4% -5.1% 10.4% 0.1% % of Total % 100.0% 1.3% 27.9% 23.2% 26.4% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 4.5% -3.7% 6.5% -0.5% -4.5% -2.0% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Yr-on-Yr Chg. 2.1% -5.4% 3.5% -5.4% -4.0% -3.6% % of Total % 26.9% 7.8% 3.5% 14.5% 15.4% 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. -4.3% -0.2% -1.0% -28.1% -3.8% 1.2% -3.4% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Yr-on-Yr Chg. -4.5% -2.3% 1.0% -15.4% -3.3% -1.3% -3.6% 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 , ,735 1, , ,776 1, , ,794 1, Q , ,857 1, Q , ,794 1, Q , ,770 1, Q , ,808 1, Q , ,781 1, Yr-on-Yr Chg. -5.9% 0.5% -5.2% -0.4% -2.0% -4.1% -5.4% -18.6% -1.6% -7.8% -13.2% -8.6% Sep , ,857 1, Oct , ,846 1, Nov , ,826 1, Dec , ,794 1, Jan , ,803 1, Feb , ,773 1, Mar , ,770 1, Apr , ,776 1, May , ,805 1, Jun , ,808 1, Jul , ,820 1, Aug , ,801 1, Sep , ,781 1, Yr-on-Yr Chg. -5.9% 0.5% -5.2% -0.4% -2.0% -4.1% -5.4% -18.6% -1.6% -7.8% -13.2% -8.6% 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

19 Page 19 C4: US Petroleum Net Imports by Source (million barrels per day) Region of Origin OPEC Canada Mexico Lat. Am. Europe Africa M.E. Total 1 Venez. S. Arabia Nigeria Total 2 P. Gulf Q Q Q Q Q Yr-on-Yr Chg. 1.0% -22.5% -15.0% % -33.2% 18.2% -15.9% -10.4% 15.9% -28.7% -9.6% 13.9% Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Yr-on-Yr Chg. 11.2% -37.0% -17.0% % -50.5% 25.2% -15.4% -20.4% 35.2% -51.9% -16.7% 19.2% % of Total % 7.3% 16.4% -1.1% 11.4% 26.4% 100.0% 9.8% 18.4% 6.9% 51.9% 25.1% Notes: 1. Total includes net-imports from Russia and Asia-Pacific region. 2. Total OPEC includes the other eight cartel members. 3. As of latest month. Source EIA Petroleum Supply Monthly. C5: US Regional Crude Oil Production (million barrels per day) PAD District U.S. Major Producers East Mid-West S-Cent N-West West Total Alaska Calif. 1 Louis. Texas G. of Mex Q Q Q Q Q Yr-on-Yr Chg. 9.1% 20.0% 0.4% 7.9% -3.3% 2.3% -4.8% -1.7% -0.3% 15.1% -10.1% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Yr-on-Yr Chg. 11.1% 24.8% 4.8% 10.0% -3.6% 5.5% -6.0% -0.1% 4.8% 27.7% -9.9% R/P Ratio Notes: 1. California includes Federal Offshore crude oil production. 2. Gulf of Mexico includes Federal Offshore production adjacent to Texas and Louisiana. 3. Crude oil Reserve-Production ratio as of latest production month. Crude oil production does not include NGLs. Source: EIA Petroleum Supply Monthly. Relevant Independent Objective