Overview January 26, 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, 104-8581 Japan https://eneken.ieej.or.jp/en/weekly_oil/index.php The key WTI (West Texas Intermediate) crude oil futures contract on the NYMEX (New York Mercantile Exchange) in the December 28-January 10 period moved within a firmer range between $59.84 per barrel and $63.57/bbl. On January 11, the February contract rose for the fourth straight day as concerns on oil oversupply in the United States faded away on crude oil inventories eight-week falling streak, an oil production decline in the previous day s weekly EIA (Energy Information Administration) report and a drop of more than 3.5 million barrels in crude oil inventories at the WTI delivery point of Cushing as reported by Genscape. The dollar s depreciation against the euro also supported crude oil futures prices by making these prices relatively lower. As the benchmark crude oil futures price hit the highest level in three years and one month, however, profit taking selling was remarkable. The key contract closed at $63.80/bbl, up $0.23/bbl from the previous day. On January 12, the February contract rose for the fifth straight day as the fading concerns on oil oversupply in the United States were combined with a Reuters-reported cautious remark by Russian Energy Minister Alexander Novak that while oversupply was being eased, the market had not reached an equilibrium. However, the rise was restricted by profit taking selling and a Baker Hughes report that the number of operating U.S. oil-drilling rigs increased by 10 from to 752. The key contract increased by $0.50/bbl to $64.30/bbl, the highest since December 5, 2014. On January 16 after a three-day weekend, the key contract turned down for the first time in six trading days as the increase in the number of operating U.S. oil-drilling rigs as announced on the previous weekend and the EIA s forecast of more than 10 million barrels per day in U.S. oil production this year prompted market players to take profit in anticipation of a downturn after the recent long winning streak. However, upward revisions to this year s WTI price forecasts by Morgan Stanley and other major financial firms supported crude oil futures. The February contract lost $0.57/bbl to $63.73/bbl. On January 17, the key contract rebounded on the dollar s further depreciation against the euro and an anticipated decline in U.S. crude oil inventories. The February contract gained $0.24/bbl to $63.97/bbl. The Asian benchmark crude oil of Dubai for February delivery on the Tokyo market moved in a range between $64.00/bbl and $66.40/bbl in the December 28-January 10 period. It closed at $66.40/bbl on January 11, at $66.30/bbl on January 12, at $67.10/bbl on January 15, at $67.20/bbl on January 16 and at $66.40/bbl on January 17. On the foreign exchange market in the December 28-January 10 period, the dollar moved within a range between 112.45 and 113.48 yen. It changed hands at 111.47 yen in late trading on January 11, at 111.23 yen on January 12, at 110.90 yen on January 15, at 110.84 yen on January 16 and at 110.36 yen on January 17. Wholesale prices that major Motouri (petroleum products wholesalers) applied to the third week of January were raised by 0.5 yen/l (liter) from by all Motouri companies for gasoline and by 0.5-1.0 yen/l for diesel oil and kerosene (heating oil). Crude oil acquisition cost rose although crude oil price hikes were partially offset by the yen s appreciation. Japan s average retail price on January 15 rose by 1.3 yen/l from for gasoline, by 1.4 yen/l for diesel oil and by 1.5 yen/l for kerosene. The gasoline price increased for the fourth straight week. The diesel price rose for the 17th straight week. The kerosene price also increased for the 17th consecutive week on an 18-liter tank basis. As crude oil cost rose in the second week of January, Motouri companies raised wholesale prices by 2.0 yen/l for gasoline and by 2.0-2.5 yen/l for diesel oil and kerosene. Crude oil a year Crude oil runs (1,000 kl) 1/7 ~ 1/13 3,827 1 - Supply/ Topper capacity Demand utilization rate Crude oil inventories Middle Eastern crude oil (TOCOM) (%) 97.7 0.0 - (1,000 kl) 1/13 12,484 111 - ($/bbl) 1/15 66.46 1.79 13.0 ($/b) 150.0 140.0 120.0 110.0 100.0 90.0 138.54 119.37 110.33 99.62 89.47 145.29 120.92 113.93 86.84 [NYMEX]WTI crude oil [TOCOM]MiddleEastern crude oil WTI crude oil (NYMEX) Crude oil import CIF price 1Crude oil import CIF price 2Yen-dollar exchange rate ($/bbl) 1/16 63.73 2.00 11.3 ($/bbl) Mid Dec 62.51 1.68 15.75 (yen/kl) 44,074 1,100 10,829 (yen/dollar) 112.09 0.22 0.95 80.0 70.0 60.0 50.0 40.0 30.0 78.21 72.68 TTS exchange rate (yen/dollar) 1/15 111.90 2.26 3.43 20.0 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/5 1/16 1
Gasoline (Unit: 1,000 kl, yen/l) a year 150.0 Gasoline (retail) Production 1/7 ~ 1/13 1,051 63 - Imports n.a. n.a. n.a. 145.0 143.2 Supply/ Demand Shipments 815-76 - Exports 60 59-140.0 Inventories 1/13 1,819 177 - Gyoten (spot) [4-district average lorry rack price] (RIM) 1/9 ~ 1/15 61.9 1.6 11.9 135.0 135.5 Futures [front-month contract/closing price] Tokyo Bay) 1/9 ~ 1/15 60.0 0.2 9.9 1/15 61.2 1.7 11.1 Chubu) Retail prices [weekly *Gyoten and futures prices are before tax (published 1/15 143.2 1.3 12.3 by ANRE) 125.0 10/16 11/14 12/13 1/15 1/11 Diesel oil (Unit: 1,000 kl, yen/l) a year Diesel oil (retail) Production 1/7 ~ 1/13 810 114-125.0 Supply/ Demand Imports n.a. n.a. n.a. Shipments 559 273-120.0 121.2 Exports 194 48 - Inventories 1/13 1,743 57 - Gyoten (spot) [4-district average lorry rack price] (RIM) 1/9 ~ 1/15 61.6 1.7 10.7 115.0 113.7 Futures [front-month contract/closing price] Tokyo Bay) 1/9 ~ 1/15 60.0 0.0 14.0 1/15 - - Chubu) - 110.0 Retail prices [weekly *Gyoten and futures prices are before tax (published 1/15 121.2 1.4 11.0 by ANRE) 105.0 10/16 11/14 12/13 1/11 1/15 Kerosene (Unit: 1,000 kl, yen/l) a year 95.0 Kerosene (retail) Production 1/7 ~ 1/13 488-9 - 90.0 Imports n.a. n.a. n.a. 86.2 Supply/ Demand Shipments 524 68-85.0 Exports 49 49 - Inventories 1/13 2,009-84 - 80.0 Gyoten (spot) [4-district average lorry rack price] (RIM) 1/9 ~ 1/15 63.9 1.6 8.9 78.1 Futures [front-month contract/closing price] Tokyo Bay) 1/9 ~ 1/15 63.5 0.5 11.9 1/15 64.8 1.8 12.3 Chubu) 75.0 Retail prices [weekly (published 1/15 86.2 1.5 8.5 by ANRE) 70.0 10/16 11/14 12/13 1/11 1/15 2
Relevant Information Overseas crude oil prices 1 Oil Market Review in Japan No. 39//2017 On January 17, the most frequently traded WTI crude oil futures contract on the NYMEX rebounded as the dollar s further depreciation against the euro making crude oil futures prices relatively lower was combined with a market forecast that U.S. crude oil inventories would decrease by 3.5 million barrels from for the ninth straight weekly drop. The forecast came before the EIA released ly oil inventory report on the next day. Crude oil futures prices were also supported by a report that armed rebels in Nigeria could attack offshore oil facilities. However, the rise was restricted by concerns about U.S. shale oil production expansion. The February contract closed at $63.97/bbl, up $0.24/bbl. The March contract rose by $0.25/bbl to $63.92/bbl. According to the EIA, the average U.S. retail price of gasoline as of January 15 rose by 3.5 cents per gallon from a week to $2.557/gal (75.5 yen/l). The average diesel oil price increased by 3.2 cents/gal to $3.028/gal (89.4 yen/l). The gasoline and diesel prices rose for the fourth straight week. 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 January 7-13 week remained unchanged from the previous week at a level close to zero (total capacity stood at 3,519,000 bpd). Crude oil throughput in the week increased by 1,000 kl from the previous week to 3,827,000 kl. a year, it decreased by 165,000 kl. The topper capacity utilization rate stood at 97.7%, unchanged from the previous week and up 3.0 points from a year. Output decreased from the previous week for jet fuel and kerosene while increasing for other petroleum products. Output was up 6.4% for gasoline, down 11.9% for jet fuel, down 1.8% for kerosene, up 16.3% for diesel oil, up 16.1% for Fuel Oil A and up 7.2% for Fuel Oil C. Fuel Oil C imports in the week totaled 58,000 kl, up 53,000 kl from the previous week. Diesel oil exports aggregated 194,000 kl, up 48,000 kl. Shipments (excluding imports) in the week decreased from the previous week for gasoline and jet fuel and increased for other petroleum products. a year, shipments decreased for gasoline, kerosene and Fuel Oil C and increased for others. Gasoline shipments decreased by 8.5% from the previous week to 815,000 kl. They decreased week on week for the third straight week and year on year for the first time in two weeks, slipping below 1 million kl for the second straight week. Shipments totaled 61,000 kl for jet fuel (down 26.0% from the previous week), 524,000 kl for kerosene (up 14.9%), 559,000 kl for diesel oil (up 95.7%), 288,000 kl for Fuel Oil A (up 102.3%) and 217,000 kl for Fuel Oil C (up 20.2%). Total 2,464 Previous week (1/7 ~ 1/13) (12/31 ~ 1/6) Gasoline 815 891 Jet fuel 61 83 Kerosene (heating Oil) 524 456 Diesel oil 559 286 Fuel oil A 288 142 Fuel Oil C 217 181 2,039-76 (-9%) -22 (-27%) 68 (15%) 273 (95%) 146 (103%) 36 (20%) 425 (21%) s shipments = (Previous weekend inventories + s production + s imports) - ( s exports + end inventories) (Unit: 1,000 kl) 2 Petroleum products supply and demand in Japan (2) Inventories Inventories as of January 13 decreased from for kerosene and Fuel Oil A and increased for petroleum products. a year, inventories decreased for all petroleum products. Gasoline inventories totaled 1,819,000 kl, up 177,000 kl from and down 49,000 kl from a year. Kerosene inventories totaled 2,009,000 kl, down 84,000 kl from and down 150,000 kl from a year. Diesel oil inventories totaled 1,743,000 kl, up 57,000 kl from and down 129,000 kl from a year. Fuel Oil A inventories totaled 713,000 kl, down 27,000 kl from and down 86,000 kl from a year. Fuel Oil C inventories totaled 1,997,000 kl, up 62,000 kl from and down 49,000 kl from a year. Previous week (1/13) (1/6) Gasoline 1,819 1,642 Jet fuel 971 969 Kerosene (heating Oil) 2,009 2,093 Diesel oil 1,743 1,686 Fuel oil A 713 740 Fuel Oil C 1,997 1,935 (Unit: 1,000 kl) 177 (11%) 2 (0%) -84 (-4%) 57 (3%) -27 (-4%) 62 (3%) Total 9,252 9,065 187 (2.1%) 3
3 Petroleum products wholesale prices in Japan (1) Wholesale price revision trend In the January 9-15 week, crude oil cost apparently increased although crude oil price hikes were partially offset by the yen s appreciation against the dollar. Onshore cargo spot prices between January 9 and 15 rose substantially in a 114-117 yen/l range for gasoline, in a 59-63 yen/l range for diesel oil and in a 62-65 yen/l range for kerosene. Offshore barge spot prices rose sharply in a 115-119 yen/l range for gasoline, increased in a 62-64 yen/l range for diesel oil and shot up in a 64-67 yen/l range for kerosene. The key futures price rose in a 113-115 yen/l range for gasoline, levelled off in a 60-61 yen/l range for diesel oil and soared in a 63-64 yen/l range for kerosene Motouri companies raised their wholesale prices by 0.5 yen/l for gasoline and by 0.5-1.0 yen/l for diesel oil and kerosene. 3 Petroleum products wholesale prices in Japan (2) Spot (Gyoten) and futures price trend Spot prices rose for all petroleum products. The latest onshore cargo spot price (the average onshore rack price for four districts -- Chiba, Kawasaki, Chukyo and Hanshin -- for the January 9-15 week) that influences Motouri s wholesale prices applied to the third week of January (January18-24) rose by 1.6 yen/l from the previous week for gasoline and kerosene and by 1.7 yen/l for diesel oil. The average offshore barge spot price in Tokyo Bay increased by 0.8 yen/l for gasoline, by 1.1 yen/l for kerosene and by 0.8 yen/l for diesel oil. The key futures price rose by 0.2 yen/l for gasoline and by 0.5 yen/l for kerosene and leveled off for diesel oil. Crude oil cost increased although crude oil price hikes were partially offset by the yen s appreciation against the dollar. For the third week of January, Motouri companies raised their wholesale prices by 0.5 yen/l for gasoline and by 0.5-1.0 yen/l for 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 2014. Spot Futures Price (RIM) [4-district average lorry Previous week rack price] (1/9 ~ 1/15) (1/2 ~ 1/8) Regular Kerosene 61.9 60.3 63.9 62.3 Diesel oil 61.6 59.9 Above prices are before tax. Reference (January 9 - January 15 actual data) Products Spot Futures Average Gasoline 1.6 0.2 0.9 Kerosene 1.6 0.5 1.0 Diesel oil 1.7 0.0 0.8 1.6 1.6 1.7 (TOCOM) [Front-month contract/closing Previous week price] [Average] (1/9 ~ 1/15) (1/2 ~ 1/8) Regular 60.0 59.8 0.2 Kerosene 63.5 63.0 0.5 Diesel oil 60.0 60.0 0.0 Fuel Oil A 1.6 (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 January 15 rose by 1.3 yen/l from to 143.2 yen/l for gasoline, by 1.4 yen/l to 121.2 yen/l for diesel oil and by 1.5 yen/l to 86.2 yen/l for kerosene. The gasoline price increased for the fourth straight week. The diesel price increased for the 17th straight week. The kerosene price also rose for the 17th consecutive week on an 18-liter tank basis. Gasoline prices increased in 45 of Japan s 47 prefectures, remained unchanged in one and decreased in one. The lowest gasoline price among the prefectures was 138.1 yen/l in Saitama Prefecture (up 1.0 yen/l). The second lowest was 138.8 yen/l in Okayama (up 0.5 yen/l). The highest price was 151.3 yen/l in Okinawa (up 1.6 yen/l). Posting the largest price hike of 3.3 yen/l was Aomori (143.7 yen/l). While crude oil cost increased in the previous week, Motouri companies raised their wholesale prices by 0.5 yen/l from for gasoline and by 0.5-1.0 yen/l for diesel oil and kerosene. The average retail gasoline price rose for the fourth straight week., crude oil cost increased although the yen s appreciation against the dollar partially offset crude oil price hikes. Retail gasoline and kerosene prices are expected to rise next week (as of January 22). (Published by ANRE)[Weekly Previous week (1/15) (1/9) Latest high Retail Price Regular 143.2 141.9 1.3 08/8/4 185.1 Kerosene 86.2 84.7 1.5 08/8/11 132.1 Diesel oil 121.2 119.8 1.4 08/8/4 167.4 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 2003. 4
Gasoline price trend (2017/10/30 ~ 2018/1/15) 160.0 ( /L ) 75.0 Left scale: retail prices 150.0 70.0 Retail price 140.0 65.0 RIM (offshore barge) 60.0 120.0 TOCOM/ futures, Tokyo Bay 110.0 TOCOM/ futures, Chubu RIM (onshore) 55.0 100.0 50.0 Right scale: RIM and futures prices 90.0 45.0 10/30 11/6 11/13 11/20 11/27 12/4 12/11 12/18 12/25 1/9 1/15 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
Announcement This report is available at the center s website (http://eneken.ieej.or.jp/en/). The next issue (No. 40 for 2017) will be announced at 14:00 on February 2. 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 2005. 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