December 17, 2014 Blake Fernandez504.582.2528 [email protected] WEEKLY REFINING INDICATORS REPORT Leonard Raymond504.582.2884 [email protected] WEEK ENDING 12/12/2014 Quick Take: Not exactly a bullish report but better than the API crude build of 2.3MMBbl/d announced yesterday evening. On the product side, the gasoline build of over 5MMBbls was much larger than expected bringing gasoline inventories about 1.5% above the 5-year average level. Gasoline demand is finally showing signs of life in this depressed pricing environment +4.1% Y/Y trailing 4-week average but wasn’t enough to offset high utilization levels at 93.5% and increased gasoline imports (+212MBbl/d wk/wk). Of note, Cushing inventories increased by 2.9MMBbls this week despite an overall US crude draw of 847MBbls. Finally an item we don’t typically reference but will begin highlighting over the coming months is overall domestic production which increased 19MBbl/d wk/wk (Alaska -4MBbl/d & Lower-48 +23MBbl/d). • • • Days of Crude Demand Cover 27x 25x 23x 21x Jan May 5-yr Avg. Jul Sep Nov 2013 2014 Days of Gasoline Demand Cover Trailing 4-week average crude throughput is 2.4% above the year-ago comp. We estimate December demand cover of 23.3 days (December ‘13 = 22.9 days, December 09-13 avg. = 23.2). 29x Trailing 4-week average gasoline demand is 4.1% above the year-ago comp. We estimate December demand cover of 24.0 days (December ‘13 = 24.8 days, December 09 -13 avg. = 24.7). 23x Trailing 4-week average distillate demand is 2.9% above the year-ago comp. We estimate December demand cover of 31.6 days (December ‘13 = 31.4 days, December 09-13 avg. = 37.2). Mar 27x 25x 21x Jan Mar May Jul 5-yr Avg. Sep Nov 2013 2014 Days of Distillate Demand Cover 55x 48x • Trailing 4-week average total product demand is 1.4% above the year-ago comp. We estimate December demand cover of 56.3 days (December ‘13 = 54.1 days, December 09-13 avg. = 55.5). 41x 34x 27x 20x Jan Mar May 5-yr Avg. Jul Sep 2013 Nov 2014 Days of Total Product Demand Cover 65x 60x 55x 50x Jan Mar May 5-yr Avg. Jul 2013 Sep Nov 2014 Information and sources for all charts and tables in this report were compiled from Howard Weil, EIA and Bloomberg. 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. All relevant disclosures and certifications begin on Page 12 of this report. Howard Weil | Scotia Capital (USA), Inc. 1100 Poydras Street, Suite 3500 New Orleans, LA 70163 Page 1 of 12 Weekly Refining Indicators Report DOE Inventories & Imports (000s) TOTAL U.S. Current Year-ago % Change 5-Yr. Average % Change Inventories Crude 379,942 372,305 2% 348,121 9% Total Gasoline (includes RFG + blendstock) 222,014 220,486 1% 218,520 2% Total Distillate (Diesel + #2 Heating Oil) 121,544 115,955 5% 139,431 -13% 16,881 104,663 17,136 98,819 -1% 6% 35,874 103,557 -53% 1% 7,104 7,732 -8% 8,045 -12% Total Gasoline (includes RFG + blendstock) 773 599 29% 739 5% Total Distillate (Diesel + #2 Heating Oil) 139 226 -38% 208 -33% 16,301 15,931 # 2 Heating Oil Diesel Imports Crude Crude Throughput Refinery Utilization 93.5% 91.5% 2% 2% 14,972 87.1% 9% 7% REGIONAL INVENTORY Current Year-ago % Change 5-Yr. Average % Change PADD 1 (Northeast) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) Total Distillate (Diesel + #2 Heating Oil) # 2 Heating Oil Diesel 11,813 9,998 18% 10,741 10% 53,717 56,534 -5% 55,489 -3% 16,155 16,164 0% 16,479 36,137 36,450 -1% 54,212 -33% 9,279 26,858 10,388 26,062 -11% 3% 27,653 26,558 -66% 1% 104,768 47,414 110,004 50,300 -5% 99,618 50,056 -5% PADD 2 (Midwest) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) -6% 5% 5,542 5,775 -4% 5,675 25,196 25,894 -3% 27,529 -8% 192,962 82,021 181,373 76,294 6% 166,814 75,790 16% 8% 11,145 10,370 7% 11,620 Total Distillate (Diesel + #2 Heating Oil) 42,618 36,874 16% 40,795 4% Crude Total Gasoline (includes RFG + blendstock) 19,898 19,733 1% 17,170 16% 7,815 4,503 7,495 3,789 4% 7,115 3,725 10% Crude Total Gasoline (includes RFG + blendstock) 50,501 31,047 51,197 29,863 -1% 53,777 30,070 -6% 4% Total Distillate (Diesel + #2 Heating Oil) 13,089 12,948 1% 13,169 -1% Total Distillate (Diesel + #2 Heating Oil) PADD 3 (Gulf Coast) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) 8% PADD 4 (Rockies) Total Distillate (Diesel + #2 Heating Oil) 19% 21% PADD 5 (West Coast) December 17, 2014 3% Page 2 of 12 Weekly Refining Indicators Report Demand vs. Supply Charts US Crude Demand (000 Bbl/d) US Crude Stocks (000 Bbls) 17,000 400,000 15,750 350,000 14,500 13,250 300,000 Jan Mar May '13 Jul '14 Sep Nov Jan Mar 5-yr Avg May Jul '13 Sep '14 Nov 5-yr Avg U.S. Gasoline Stocks (000 Bbls) U.S. Gasoline Demand (000 Bbl/d) 250,000 9,850 9,375 225,000 8,900 200,000 8,425 175,000 7,950 Jan Mar May Jul '13 '14 Sep Jan Nov Mar May Jul '13 5-yr Avg US Distillate Demand (000 Bbl/d) '14 Sep Nov 5-yr Avg US Distillate Stocks (000 Bbls) 4,450 180,000 160,000 4,000 140,000 3,550 120,000 3,100 100,000 Jan Mar May '13 Jul '14 Sep Nov Jan Mar 5-yr Avg May '13 US Total Product Demand (000 Bbl/d) 20,750 Jul '14 Sep Nov 5-yr Avg US Total Product Stocks (000 Bbls) 1,200,000 1,150,000 19,500 1,100,000 18,250 1,050,000 17,000 1,000,000 Jan Mar May '13 December 17, 2014 Jul '14 Sep 5-yr Avg Nov Jan Mar May '13 Jul '14 Sep Nov 5-yr Avg Page 3 of 12 Weekly Refining Indicators Report Regional Refinery Utilization US Total Refinery Utilization (%) PADD I Refinery Utilization (%) 100 100.0 95 90.0 90 80.0 85 70.0 80 75 60.0 Jan Feb Mar Apr May '13 Jun Jul '14 Aug Sep Oct Nov Dec Jan Feb 5-yr Avg Mar Apr May Jun Jul '10-'13 avg Aug Sep Oct Nov Dec '14 PADD III Refinery Utilization (%) PADD II Refinery Utilization (%) 101.0 100.0 91.0 90.0 81.0 80.0 71.0 70.0 60.0 61.0 Jan Feb Mar Apr May Jun Jul '10-'13 avg Aug Sep Oct Jan Feb Nov Dec Mar Apr May Jun Jul '10-'13 avg '14 Aug Sep Oct Nov Dec '14 PADD V Refinery Utilization (%) PADD IV Refinery Utilization (%) 101.0 100.0 91.0 90.0 81.0 80.0 71.0 70.0 60.0 61.0 Jan Feb Mar Apr May Jun Jul '10-'13 avg December 17, 2014 Aug Sep Oct '14 Nov Dec Jan Feb Mar Apr May Jun Jul '10-'13 avg Aug Sep Oct Nov Dec '14 Page 4 of 12 Weekly Refining Indicators Report Regional Crack Spreads East Coast 6-3-2-1 (Brent + Freight) Average: 4Q13 1Q14 2Q14 3Q14 $3.70 $8.39 $7.46 $8.75 QTD 14 $9.88 East Coast 6-3-2-1 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 5-yr Range Chicago 2-1-1 (WTI) Average: 4Q13 1Q14 2Q14 3Q14 $20.03 $21.18 $22.08 $20.55 QTD 14 $21.99 '13 '14 Chicago 2-1-1 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 5-yr Range Gulf Coast 3-2-1 (LLS) Average: 4Q13 1Q14 2Q14 3Q14 $9.47 $10.86 $14.05 $12.11 '13 '14 Gulf Coast 3-2-1 $25.00 $20.00 $15.00 QTD 14 $7.16 $10.00 $5.00 $0.00 ($5.00) 5-yr Range December 17, 2014 '13 '14 Page 5 of 12 Weekly Refining Indicators Report Regional Crack Spreads West Coast 5-3-2 (ANS cif W. Coast) Average: 4Q13 1Q14 2Q14 3Q14 $12.97 $14.00 $19.41 $16.85 QTD 14 $14.40 West Coast 5-3-2 $42.50 $34.00 $25.50 $17.00 $8.50 $0.00 5-yr Range NW Europe 2-1-1 (Brent) Average: 4Q13 1Q14 2Q14 3Q14 $8.30 $8.97 $11.54 $12.70 QTD 14 $11.39 '13 '14 NW Europe 2-1-1 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 5-yr Range Singapore 2-1-1 (Dubai) Average: 4Q13 1Q14 2Q14 3Q14 $11.43 $14.86 $13.88 $13.89 QTD 14 $15.02 '13 '14 Singapore 2-1-1 $30.00 $24.00 $18.00 $12.00 $6.00 $0.00 5-yr Range December 17, 2014 '13 '14 Page 6 of 12 Weekly Refining Indicators Report Crude Oil Differentials LLS - Maya LLS- Maya Average: 4Q13 1Q14 2Q14 3Q14 $11.59 $15.17 $9.76 $10.09 $24 $18 $12 QTD 14 $8.66 $6 $0 '13 $5.28 $3.73 $4.73 $3.70 QTD 14 $3.92 5-yr Avg LLS - Mars LLS - Mars Average: 4Q13 1Q14 2Q14 3Q14 '14 $12 $9 $6 $3 $0 ($3) '13 LLS - ANS Average: 4Q13 1Q14 2Q14 3Q14 ($4.08) ($1.52) ($4.05) ($1.24) '14 5-yr Avg LLS - ANS $15 $10 $5 $0 QTD 14 $2.01 ($5) ($10) ($15) '13 $3.61 $5.84 $2.41 $3.43 QTD 14 $3.02 5-yr Avg LLS - WTI LLS - WTI Average: 4Q13 1Q14 2Q14 3Q14 '14 $35 $28 $21 $14 $7 $0 ($7) '13 December 17, 2014 '14 5-yr Avg Page 7 of 12 Weekly Refining Indicators Report Crude Oil Differentials LLS - Brent LLS - Brent Average: 4Q13 1Q14 2Q14 3Q14 ($8.36) ($3.51) ($4.35) ($0.94) QTD 14 ($0.03) $10 $5 $0 ($5) ($10) ($15) '13 QTD 14 $11.97 $9.35 $6.75 $4.37 $3.05 5-yr Avg Brent - WTI Brent - WTI Average: 4Q13 1Q14 2Q14 3Q14 '14 $32 $24 $16 $8 $0 ($8) '13 $3.85 $5.45 $7.35 $8.86 QTD 14 $1.72 5-yr Avg WTI-WTS WTI - WTS Average: 4Q13 1Q14 2Q14 3Q14 '14 $20 $15 $10 $5 $0 ($5) '13 QTD 14 $23.60 $12.95 $11.47 $10.81 $8.93 5-yr Avg Brent - Clearbrook (Bakken) Brent - Clearbrook (Bakken) Average: 4Q13 1Q14 2Q14 3Q14 '14 $50 $40 $30 $20 $10 $0 '13 December 17, 2014 '14 '10-'12 Avg Page 8 of 12 Weekly Refining Indicators Report CFTC: Non-Commercial Positions NYMEX WTI NYMEX WTI: Open Interest vs. Price Net Long (Short) Position 375,000 280,101 267,304 268,532 276,832 255,363 253,001 264,996 261,776 250,000 125,000 0 $120.00 1.75 $95.00 1.5 $70.00 1.25 $45.00 1 $20.00 2009 10/24/14 10/31/14 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 WTI ($/bbl) # of contracts 500,000 Oil Open Interest (MM Contracts) 2 1 contract = 1,000 barrels 2010 2011 2012 Open Interest NYMEX RBOB 2013 2014 WTI NYMEX #2 Heating Oil Net Long (Short) Position Net Long (Short) Position 1 contract = 42,000 gallons 1 contract = 42,000 gallons 0 100,000 10/24/14 10/31/14 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 75,000 54,789 57,927 58,210 62,103 68,247 70,021 68,060 50,000 25,000 0 10/24/14 10/31/14 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 December 17, 2014 # of contracts # of contracts 76,971 (10,000) (20,000) (22,112) (30,000) (22,681) (21,931) (26,509) (28,461) (27,910) (28,569) (28,613) (40,000) Page 9 of 12 Weekly Refining Indicators Report Shipping Trans-Atlantic Arbitrage: CRUDE OIL Trans-Atlantic Arbitrage: GASOLINE WTI-Brent (Net of Freight) USAC-NWE (Net of Freight) 20.0 $0.00 $ per barrel ($1.00) ($0.80) ($1.01) ($1.20) ($0.87) ($2.00) ($1.88) ($2.49) ($3.00) cents per gallon 10/24/14 10/31/14 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 15.0 10.0 8.2 6.3 5.0 3.7 3.0 3.7 ($2.85) 3.1 1.3 ($3.08) 1.0 0.0 10/24/14 10/31/14 ($4.00) 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 Gulf Coast/Europe Arbitrage: ULSD Persian Gulf-USGC: Freight Rate (250' dirty tanker) USGC-NWE Trailing 8 weeks (Net of Freight) $1.20 3.0 $0.92 $0.85 1.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10/24/14 10/31/14 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 $ per barrel cents per gallon $0.90 $0.85 $0.79 $0.79 $0.85 $0.79 $0.66 $0.60 $0.30 (1.5) $0.00 10/24/14 10/31/14 11/7/14 11/14/14 11/21/14 11/28/14 12/5/14 12/12/14 (3.0) (3.0) Total US Product Imports (000 Bbl/d) Total US Product Exports (000 Bbl/d) 4,000 4,000 3,500 3,500 3,000 3,000 2,500 2,500 2,000 2,000 1,500 1,500 1,000 1,000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 5-yr Avg. '13 1 4 '14 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 5-yr Avg. '13 '14 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 December 17, 2014 Page 10 of 12 Weekly Refining Indicators Report WTI BRENT NYMEX WTI: 12-Month Strip ICE Brent: 12-Month Strip 87 87 79 79 $ per barrel $ per barrel Energy Futures 71 63 55 CL2 CL3 11/21/2014 CL4 CL5 CL6 11/28/2014 CL7 CL8 CL9 CL10 CL11 CL12 12/5/2014 CO1 12/12/2014 CO2 CO3 11/21/2014 CO4 CO5 CO6 CO7 11/28/2014 CO8 RBOB NYMEX RBOB: 12-Month Strip ICE RBOB: 12-Month Strip 231 231 212 212 193 174 155 CO9 CO10 CO11 CO12 12/5/2014 RBOB ¢ per gallon ¢ per gallon 63 55 CL1 12/12/2014 193 174 155 XB1 XB2 XB3 XB4 11/21/2014 XB5 XB6 XB7 11/28/2014 XB8 XB9 XB10 XB11 XB12 12/5/2014 PG1 PG2 PG3 11/21/2014 12/12/2014 PG4 PG5 PG6 PG7 11/28/2014 PG8 PG9 PG10 PG11 PG12 12/5/2014 #2 HEATING OIL GASOIL NYMEX #2 Oil: 12-Month Strip ICE Gasoil: 12-Month Strip 250 250 232 232 ¢ per gallon ¢ per gallon 71 214 196 178 12/12/2014 214 196 178 HO1 HO2 HO3 11/21/2014 HO4 HO5 HO6 11/28/2014 HO7 HO8 HO9 HO10 HO11 HO12 12/5/2014 QS1 12/12/2014 QS2 QS3 11/21/2014 QS4 QS5 QS6 QS7 11/28/2014 QS8 QS9 QS10 QS11 QS12 12/5/2014 12/12/2014 3-2-1 REFINING MARGIN 2-1-1 REFINING MARGIN NYMEX 3-2-1: 12-Month Strip ICE 2-1-1: 12-Month Strip 27.00 27.00 21.00 21.00 $ per barrel $ per barrel * Only 8 contracts available for European Gas Oil 15.00 9.00 3.00 15.00 9.00 3.00 1 2 3 11/21/2014 4 5 6 11/28/2014 7 8 9 12/5/2014 10 11 12 Avg. 12/12/2014 1 2 11/21/2014 3 4 5 6 11/28/2014 7 8 9 12/5/2014 10 11 12 Avg. 12/12/2014 * Only 8 contracts available for European Gas Oil December 17, 2014 Page 11 of 12 Weekly Refining Indicators Report Disclosures Information and sources for all charts and tables in this report were compiled from 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 Howard Weil Research analyst. 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. Howard Weil Research analysts focus primarily on the US Energy Sector. Scotia Capital (USA) Inc. is a wholly owned subsidiary of Scotia Capital Inc., a Canadian registered investment dealer, and indirectly owned by The Bank of Nova Scotia. 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