WEEKLY REFINING INDICATORS REPORT WEEK ENDING 06/17/2016

WEEKLY REFINING INDICATORS REPORT WEEK ENDING 06/17/2016 Blake Fernandez, Analyst 713.393.4524 blakef@howardweil.com Quick Take: Somewhat bearish stats on the refining side as we had hoped for some gasoline draws into what should be a healthy driving season. Utilization ramped up 1.1% from last week, which contributed to the oil draw and product build. Also, gasoline imports were up 129MBbl/d wk/wk adding to the build. Lower 48 production declined 34MBbl/d, now down about 1MMBbl/d over year ago levels. Product demand looks healthy with gasoline +3.9% Y/Y, while distillate is down 1.6%. However, we expect an improvement in distillate demand once rig activity increases later this year/next year. Days of Crude Demand Cover 37x 33x 29x 25x 21x 5-yr Avg. 2015 2016 Trailing 4-week average crude throughput is 0.5% below the year-ago comp. We estimate June demand cover of 32.5 days (June 15 = 28.3 days, June 11-15 avg. = 25.3). 29x 27x Days of Gasoline Demand Cover Trailing 4-week average gasoline demand is 3.9% above the year-ago comp. We estimate June demand cover of 24.5 days (June 15 = 22.8 days, June 11-15 avg. = 23.5). Trailing 4-week average distillate demand is 1.6% below the year-ago comp. We estimate June demand cover of 40.2 days (June 15 = 34.2 days, June 11-15 avg. = 33.4). Trailing 4-week average total product demand is 2.1% above the year-ago comp. We estimate June demand cover of 67.6 days (June 15 = 62.5 days, June 11-15 avg. = 59.0). 25x 23x 21x 5-yr Avg. 2015 2016 Days of Distillate Demand Cover 52x 44x 36x 28x 20x 5-yr Avg. 2015 2016 71x Days of Total Product Demand Cover 66x 61x 56x 51x 5-yr Avg. 2015 2016 Information and sources for all charts and tables in this report were compiled from Scotia Howard Weil, EIA and Bloomberg. For all relevant disclosures and certifications see Appendix A Important Disclosures of this report. Scotia Howard Weil is a division of Scotia Capital (USA) Inc., a member of the Scotiabank group, and represents Scotiabank s energy equities business in the United States. Scotia Howard Weil 1100 Poydras Street, Suite 3500 New Orleans, LA 70163 Page 1 of 12

DOE Inventories & Imports (000s) Inventories TOTAL U.S. Current Year-ago % Change 5-Yr. Average % Change Crude 530,626 462,993 15% 398,921 33% Total Gasoline (includes RFG + blendstock) 237,631 218,494 9% 214,367 11% Total Distillate (Diesel + #2 Heating Oil) 152,314 135,428 12% 127,913 19% # 2 Heating Oil 13,445 12,871 4% 20,466-34% Diesel 138,869 122,557 13% 107,446 29% Imports Crude 8,439 6,765 25% 8,206 3% Total Gasoline (includes RFG + blendstock) 876 896-2% 815 8% Total Distillate (Diesel + #2 Heating Oil) 146 128 14% 102 43% Crude Throughput 16,505 16,532 0% 15,669 5% Refinery Utilization 91.3% 94.0% -3% 90.3% 1% REGIONAL INVENTORY Current Year-ago % Change 5-Yr. Average % Change PADD 1 (Northeast) Crude 17,785 17,075 4% 12,982 37% Total Gasoline (includes RFG + blendstock) 68,624 59,578 15% 58,915 16% RBOB (Alcohol) 21,850 18,441 18% 17,810 Total Distillate (Diesel + #2 Heating Oil) 57,834 43,284 34% 41,572 39% # 2 Heating Oil 6,958 6,140 13% 13,195-47% Diesel 50,876 37,144 37% 28,377 79% PADD 2 (Midwest) Crude 153,672 137,733 12% 111,098 38% Total Gasoline (includes RFG + blendstock) 53,118 48,186 10% 48,654 9% RBOB (Alcohol) 6,065 6,704-10% 6,060 Total Distillate (Diesel + #2 Heating Oil) 30,266 32,394-7% 29,044 4% PADD 3 (Gulf Coast) Crude 272,857 230,432 18% 199,993 36% Total Gasoline (includes RFG + blendstock) 79,602 75,010 6% 71,828 11% RBOB (Alcohol) 11,041 11,260-2% 10,798 Total Distillate (Diesel + #2 Heating Oil) 47,630 43,032 11% 40,654 17% PADD 4 (Rockies) Crude 24,118 21,590 12% 18,318 32% Total Gasoline (includes RFG + blendstock) 7,601 7,295 4% 6,452 18% Total Distillate (Diesel + #2 Heating Oil) 3,355 4,316-22% 4,038-17% PADD 5 (West Coast) Crude 62,195 56,163 11% 56,220 11% Total Gasoline (includes RFG + blendstock) 28,687 28,425 1% 28,564 0% Total Distillate (Diesel + #2 Heating Oil) 13,230 12,402 7% 12,557 5% Page 2 of 12

Demand vs. Supply Charts 17,000 US Crude Demand (000 Bbl/d) 560,000 US Crude Stocks (000 Bbls) 16,000 500,000 15,000 440,000 14,000 380,000 13,000 320,000 9,850 U.S. Gasoline Demand (000 Bbl/d) 270,000 Gasoline Stocks (000 Bbls) 9,350 250,000 8,850 230,000 8,350 210,000 7,850 190,000 4,400 Distillate Demand (000 Bbl/d) 180,000 Distillate Stocks (000 Bbls) 4,100 160,000 3,800 140,000 3,500 120,000 3,200 100,000 Total Product Demand (000 Bbl/d) Total Product Stocks (000 Bbls) 21,100 1,395,000 20,200 1,290,000 19,300 1,185,000 18,400 1,080,000 17,500 975,000 Page 3 of 12

Regional Refinery Utilization US Total Refinery Utilization (%) PADD I Refinery Utilization (%) 100 100.0 95 90.0 90 85 80.0 80 70.0 75 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr Avg '16 PADD II Refinery Utilization (%) PADD III Refinery Utilization (%) 100.0 100.0 90.0 90.0 80.0 80.0 70.0 70.0 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr Avg '16 5-yr Avg '16 PADD IV Refinery Utilization (%) PADD V Refinery Utilization (%) 100.0 100.0 90.0 90.0 80.0 80.0 70.0 70.0 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr Avg '16 5-yr Avg '16 Page 4 of 12

Regional Crack Spreads East Coast 6-3-2-1 (Brent + Freight) 2Q15 $11.50 3Q15 $11.59 4Q15 $7.65 1Q16 $6.31 QTD 16 $9.38 $25.00 $20.00 $15.00 East Coast 6-3-2-1 $10.00 $5.00 Chicago 2-1-1 (WTI) 2Q15 $21.87 3Q15 $22.29 4Q15 $15.23 1Q16 $11.95 QTD 16 $16.18 $50.00 $40.00 $30.00 Chicago 2-1-1 $20.00 $10.00 Gulf Coast 3-2-1 (LLS) 2Q15 $14.92 3Q15 $15.51 4Q15 $9.28 1Q16 $9.22 QTD 16 $11.27 $24.00 $18.00 $12.00 Gulf Coast 3-2-1 $6.00 ($6.00) Page 5 of 12

Regional Crack Spreads West Coast 5-3-2 (ANS cif W. Coast) 2Q15 $28.07 3Q15 $28.76 4Q15 $22.58 1Q16 $17.28 QTD 16 $18.86 $60.00 $48.00 $36.00 West Coast 5-3-2 $24.00 $12.00 NW Europe 2-1-1 (Brent) 2Q15 $15.87 3Q15 $16.49 4Q15 $10.88 1Q16 $7.94 QTD 16 $10.59 $25.00 $20.00 $15.00 NW Europe 2-1-1 $10.00 $5.00 Singapore 2-1-1 (Dubai) 2Q15 $15.42 3Q15 $14.38 4Q15 $14.38 1Q16 $11.35 QTD 16 $9.39 $30.00 $24.00 $18.00 Singapore 2-1-1 $12.00 $6.00 Page 6 of 12

Crude Oil Differentials LLS- Maya 2Q15 $7.67 3Q15 $7.40 4Q15 $9.24 1Q16 $8.92 QTD 16 $9.82 $25 $20 $15 $10 LLS - Maya $5 LLS - Mars 2Q15 $3.37 3Q15 $4.93 4Q15 $4.51 1Q16 $5.17 QTD 16 $5.40 $10 $8 $6 $4 LLS - Mars $2 LLS - ANS 2Q15 $1.73 3Q15 (.37) 4Q15 $1.50 1Q16 $2.85 QTD 16 $2.81 $21 $14 $7 LLS - ANS ($7) ($14) '14 '16 5-yr Avg LLS - WTI 2Q15 $5.25 3Q15 $3.56 4Q15 $1.52 1Q16 $1.77 QTD 16 $1.91 $32 $24 $16 $8 LLS - WTI ($8) Page 7 of 12

Crude Oil Differentials LLS - Brent 2Q15.66 3Q15.24 4Q15.23 1Q16.64 QTD 16 $1.36 $10 $5 ($5) LLS - Brent ($10) ($15) Brent - WTI 2Q15 $4.59 3Q15 $3.32 4Q15 $1.29 1Q16 $1.13 QTD 16.56 $32 $24 $16 $8 Brent - WTI ($8) WTI - WTS 2Q15 (.67) 3Q15 ($1.38) 4Q15.05 1Q16.22 QTD 16.86 $20 $15 $10 $5 WTI-WTS ($5) Brent - Clearbrook (Bakken) 2Q15 $6.81 3Q15 $6.47 4Q15 $2.33 1Q16 $2.64 QTD 16.86 $60 $45 $30 $15 Brent - Clearbrook (Bakken) ($15) Page 8 of 12

# of contracts # of contracts # of contracts Oil Open Interest (MM Contracts) CFTC: Non-Commercial Positions NYMEX WTI NYMEX WTI: Open Interest vs. Price Net Long (Short) Position 1 contract = 1,000 barrels 2 $1 20.0 0 400,000 300,000 200,000 334,265 318,544 291,960 368,769 348,142 347,002 325,182 312,585 1.7 5 1.5 $9 5.00 $7 0.00 WTI ($/bbl) 1.2 5 $4 5.00 100,000 0 1 20 11 20 12 20 13 20 14 20 15 20 16 20 17 $2 0.00 Open Interest WTI NYMEX RBOB Net Long (Short) Position 1 contract = 42,000 gallons NYMEX #2 Heating Oil Net Long (Short) Position 1 contract = 42,000 gallons 120,000 16,000 14,436 90,000 60,000 75,028 72,916 71,537 69,930 64,488 59,574 57,437 52,455 12,000 8,000 7,110 8,671 8,420 11,534 12,196 9,691 4,175 30,000 4,000 0 0 Page 9 of 12

cents per gallon $ per barrel $ per barrel cents per gallon Shipping Trans-Atlantic Arbitrage: CRUDE OIL Trans-Atlantic Arbitrage: GASOLINE LLS-Brent (Net of Freight) USAC-NWE (Net of Freight) $1.20 28.0.90.93.99 $1.02 21.0.60.53.57.53 14.0 14.9 13.3 11.4 15.3 14.1 11.4.30.29 7.0 7.1 0.0 0.0 Gulf Coast/Europe Arbitrage: ULSD USGC-NWE (Net of Freight) Persian Gulf-USGC: Freight Rate (250' dirty tanker) Trailing 8 weeks $2.00 4.0 3.0 3.4 $1.50 2.0 $1.00.85.98 $1.05.92.79.92.92.72 1.0.50 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 Total US Product Exports (000 Bbl/d) Total US Product Imports (000 Bbl/d) 4,750 4,750 4,000 4,000 3,250 3,250 2,500 2,500 1,750 1,750 1,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 1,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Note: Arb spread estimates provided above represent absolute values: Positive # Arb profit on NWE-sourced cargoes imported to U.S. Negative # Arb profit (ignore +/- sign) on U.S.-sourced cargoes exported to NWE Page 10 of 12

$ per barrel $ per barrel per gallon per gallon per gallon per gallon $ per barrel $ per barrel Energy Futures WTI NYMEX WTI: 12-Month Strip BRENT ICE Brent: 12-Month Strip 54 54 52 52 50 50 48 48 46 CL1 CL2 CL3 CL4 CL5 CL6 CL7 CL8 CL9 CL10 CL11 CL12 46 CO1 CO2 CO3 CO4 CO5 CO6 CO7 CO8 CO9 CO10 CO11 CO12 RBOB RBOB NYMEX RBOB: 12-Month Strip ICE RBOB: 12-Month Strip 170 170 160 160 150 150 140 140 130 XB1 XB2 XB3 XB4 XB5 XB6 XB7 XB8 XB9 XB10 XB11 XB12 130 PG1 PG2 PG3 PG4 PG5 PG6 PG7 PG8 PG9 PG10 PG11 PG12 #2 HEATING OIL GASOIL NYMEX #2 Oil: 12-Month Strip ICE Gasoil: 12-Month Strip 163 163 156 156 149 149 142 142 135 HO1 HO2 HO3 HO4 HO5 HO6 HO7 HO8 HO9 HO10 HO11 HO12 135 QS1 QS2 QS3 QS4 QS5 QS6 QS7 QS8 QS9 QS10 QS11 QS12 * Only 8 contracts available for European Gas Oil 3-2-1 REFINING MARGIN NYMEX 3-2-1: 12-Month Strip 2-1-1 REFINING MARGIN ICE 2-1-1: 12-Month Strip 21.00 21.00 17.00 17.00 13.00 13.00 9.00 9.00 5.00 1 2 3 4 5 6 7 8 9 10 11 12 Avg. 5.00 1 2 3 4 5 6 7 8 9 10 11 12 Avg. * Only 8 contracts available for European Gas Oil Page 11 of 12

Appendix A: Important Disclosures Information and sources for all charts and tables in this report were compiled from Scotia Howard Weil, EIA and Bloomberg. Analyst Certification I, Blake Fernandez, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Blake Fernandez, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report. Important Disclosures This report was prepared by a Scotia Howard Weil Research analyst. Scotia Howard Weil is a Division of Scotia Capital (USA) Inc., a US Registered broker-dealer and a member of the New York Stock Exchange and FINRA. Scotia Howard Weil Research analysts focus primarily on the US Energy Sector. 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