January 28, 2015 Blake Fernandez504.582.2528 [email protected] WEEKLY REFINING INDICATORS REPORT WEEK ENDING 01/23/2015 Quick Take: Another round of substantial crude builds as higher imports combined with continued depressed utilization rates mostly accounting for the larger than expected increase this week. Inventories at Cushing continue to build, up 2.1MMBbls wk/wk to 38.9MMBbls, which is putting more pressure on the Brent/WTI spread. On the demand side, gasoline is up 8.0% and distillate is up 5.6% on a Y/Y trailing 4-week basis. Product exports increased by 219MBbl/d from last month bringing total to 3,590MBbl/d. Finally, overall domestic production increased by 27MBbl/d wk/wk (Alaska -3MBbl/d & Lower-48 +30MBbl/d). • • Trailing 4-week average crude throughput is even with the year-ago comp. We estimate January demand cover of 25.4 days (January ‘14 = 22.9 days, January 10-14 avg. = 23.7). Trailing 4-week average gasoline demand is 8.0% above the year-ago comp. We estimate January demand cover of 27.0 days (January ‘14 = 28.1 days, January 10-14 avg. = 27.4). Leonard Raymond504.582.2884 [email protected] Days of Crude Demand Cover 27x 26x 24x 23x 21x Jan Mar May 5-yr Avg. Jul Sep Nov 2014 2015 Days of Gasoline Demand Cover 29x 27x 25x 23x 21x • • Jan Trailing 4-week average distillate demand is 5.6% above the year-ago comp. We estimate January demand cover of 34.3 days (January ‘14 = 31.6 days, January 10-14 avg. = 39.5). Trailing 4-week average total product demand is 4.2% above the year-ago comp. We estimate January demand cover of 58.6 days (January ‘14 = 54.8 days, January 10-14 avg. = 57.1). Mar May Jul 5-yr Avg. Sep Nov 2014 2015 Days of Distillate Demand Cover 55x 48x 41x 34x 27x 20x Jan Mar May 5-yr Avg. Jul Sep 2014 Nov 2015 Days of Total Product Demand Cover 65x 60x 55x 50x Jan Mar May 5-yr Avg. Jul 2014 Sep Nov 2015 Information and sources for all charts and tables in this report were compiled from Scotia Howard Weil, EIA and Bloomberg. 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. All relevant disclosures and certifications begin on Page 12 of this report. Scotia Howard Weil 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 406,727 357,645 14% 347,097 17% Total Gasoline (includes RFG + blendstock) 238,335 234,446 2% 232,510 3% Total Distillate (Diesel + #2 Heating Oil) 132,687 116,154 14% 142,752 -7% 13,881 118,806 17,333 98,821 -20% 20% 30,268 112,485 -54% 6% 7,422 8,048 -8% 8,375 -11% Total Gasoline (includes RFG + blendstock) 597 466 28% 826 -28% Total Distillate (Diesel + #2 Heating Oil) 439 317 38% 339 29% 15,256 15,417 -1% 14,408 # 2 Heating Oil Diesel Imports Crude Crude Throughput Refinery Utilization 88.0% 88.2% 0% 83.6% 6% 5% REGIONAL INVENTORY Current Year-ago % Change 5-Yr. Average % Change PADD 1 (Northeast) Crude Total Gasoline (includes RFG + blendstock) 13,018 11,047 18% 11,185 16% 64,278 63,728 1% 60,649 6% 19,872 19,530 2% 18,619 37,448 29,538 27% 48,911 -23% 6,665 30,783 9,383 20,155 -29% 53% 22,103 26,808 -70% 15% 119,977 52,770 110,073 53,391 101,519 54,152 18% -1% 5,364 5,782 -7% 6,035 31,834 27,593 15% 31,562 202,341 80,968 166,342 75,325 22% 7% 166,496 76,861 11,008 9,197 20% 11,226 Total Distillate (Diesel + #2 Heating Oil) 43,064 41,016 5% 44,125 -2% Crude Total Gasoline (includes RFG + blendstock) 20,027 19,621 2% 17,309 16% 7,733 4,332 7,462 4,048 4% 6,930 3,646 12% Crude Total Gasoline (includes RFG + blendstock) 51,364 32,586 50,562 34,540 -6% 50,589 33,918 -4% Total Distillate (Diesel + #2 Heating Oil) 16,009 13,959 15% 14,509 10% RBOB (Alcohol) Total Distillate (Diesel + #2 Heating Oil) # 2 Heating Oil Diesel PADD 2 (Midwest) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) Total Distillate (Diesel + #2 Heating Oil) 9% -3% 1% PADD 3 (Gulf Coast) Crude Total Gasoline (includes RFG + blendstock) RBOB (Alcohol) 22% 5% PADD 4 (Rockies) Total Distillate (Diesel + #2 Heating Oil) 7% 19% PADD 5 (West Coast) January 28, 2015 2% 2% Page 2 of 12 Weekly Refining Indicators Report Demand vs. Supply Charts US Crude Stocks (000 Bbls) US Crude Demand (000 Bbl/d) 420,000 17,000 395,000 16,000 370,000 15,000 345,000 14,000 13,000 320,000 Jan Mar May 2014 Jul Sep 2015 Nov Jan Mar May 2014 5-yr Avg US Gasoline Demand (000 Bbl/d) Jul Sep 2015 Nov 5-yr Avg US Gasoline Stocks (000 Bbls) 250,000 9,850 235,000 9,350 220,000 8,850 205,000 8,350 7,850 190,000 Jan Mar May 2014 Jul Sep 2015 Nov Jan Mar May 2014 5-yr Avg Jul Sep 2015 Nov 5-yr Avg US Distillate Stocks (000 Bbls) US Distillate Demand (000 Bbl/d) 4,400 180,000 4,100 160,000 3,800 140,000 3,500 120,000 3,200 Jan Mar May 2014 Jul Sep 2015 Nov 100,000 Jan Mar 5-yr Avg May 2014 US Total Product Demand (000 Bbl/d) Jul Sep 2015 Nov 5-yr Avg US Total Product Stocks (000 Bbls) 1,200,000 21,000 1,150,000 20,000 19,000 1,100,000 18,000 1,050,000 17,000 1,000,000 Jan Mar May 2014 January 28, 2015 Jul 2015 Sep Nov 5-yr Avg Jan Mar May 2014 Jul 2015 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 '14 Jun Jul '15 Aug Sep Oct Nov Dec Jan Feb 5-yr Avg Mar Apr May Jun Jul 5-yr Avg Aug Sep Oct Nov Dec '15 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 5-yr Avg Aug Sep Oct Jan Feb Nov Dec Mar Apr May Jun Jul 5-yr Avg '15 Aug Sep Oct Nov Dec '15 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 5-yr Avg January 28, 2015 Aug Sep Oct '15 Nov Dec Jan Feb Mar Apr May Jun Jul 5-yr Avg Aug Sep Oct Nov Dec '15 Page 4 of 12 Weekly Refining Indicators Report Regional Crack Spreads East Coast 6-3-2-1 (Brent + Freight) Average: 1Q14 2Q14 3Q14 4Q14 $8.39 $7.46 $8.75 $9.31 QTD 15 $9.63 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: 1Q14 2Q14 3Q14 4Q14 $21.18 $22.08 $20.55 $19.93 QTD 15 $11.27 '14 '15 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: 1Q14 2Q14 3Q14 4Q14 $10.86 $14.05 $12.11 $6.19 QTD 15 $8.74 '14 '15 Gulf Coast 3-2-1 $24.00 $18.00 $12.00 $6.00 $0.00 ($6.00) 5-yr Range January 28, 2015 '14 '15 Page 5 of 12 Weekly Refining Indicators Report Regional Crack Spreads West Coast 5-3-2 (ANS cif W. Coast) Average: 1Q14 2Q14 3Q14 4Q14 $14.00 $19.41 $16.85 $12.80 QTD 15 $11.11 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: 1Q14 2Q14 3Q14 4Q14 $8.97 $11.54 $12.70 $11.21 QTD 15 $11.01 '14 '15 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: 1Q14 2Q14 3Q14 4Q14 $14.86 $13.88 $13.89 $15.22 QTD 15 $13.46 '14 '15 Singapore 2-1-1 $30.00 $24.00 $18.00 $12.00 $6.00 $0.00 5-yr Range January 28, 2015 '14 '15 Page 6 of 12 Weekly Refining Indicators Report Crude Oil Differentials LLS - Maya LLS- Maya Average: 1Q14 2Q14 3Q14 4Q14 QTD 15 $15.17 $9.76 $10.09 $8.96 $9.40 $25 $20 $15 $10 $5 $0 '14 $3.73 $4.73 $3.70 $3.86 QTD 15 $4.05 5-yr Avg LLS - Mars LLS - Mars Average: 1Q14 2Q14 3Q14 4Q14 '15 $10 $8 $6 $4 $2 $0 '14 LLS - ANS Average: 1Q14 2Q14 3Q14 4Q14 QTD 15 ($1.52) ($4.05) ($1.24) $1.58 $0.88 '15 5-yr Avg LLS - ANS $21 $14 $7 $0 ($7) ($14) '14 $5.84 $2.41 $3.43 $2.87 QTD 15 $1.38 5-yr Avg LLS - WTI LLS - WTI Average: 1Q14 2Q14 3Q14 4Q14 '15 $32 $24 $16 $8 $0 ($8) '14 January 28, 2015 '15 5-yr Avg Page 7 of 12 Weekly Refining Indicators Report Crude Oil Differentials LLS - Brent LLS - Brent Average: 1Q14 2Q14 3Q14 4Q14 QTD 15 $10 ($3.51) ($4.35) ($0.94) ($0.30) $5 $1.16 ($5) $0 ($10) ($15) '14 $9.35 $6.75 $4.37 $3.17 QTD 15 $0.23 5-yr Avg Brent - WTI Brent - WTI Average: 1Q14 2Q14 3Q14 4Q14 '15 $32 $24 $16 $8 $0 ($8) '14 $5.45 $7.35 $8.86 $2.06 QTD 15 $2.08 5-yr Avg WTI-WTS WTI - WTS Average: 1Q14 2Q14 3Q14 4Q14 '15 $20 $15 $10 $5 $0 ($5) '14 QTD 15 $12.95 $11.47 $10.81 $9.00 $5.89 5-yr Avg Brent - Clearbrook (Bakken) Brent - Clearbrook (Bakken) Average: 1Q14 2Q14 3Q14 4Q14 '15 $50 $40 $30 $20 $10 $0 '14 January 28, 2015 '15 '11-'14 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 375,000 264,996 261,776 284,079 281,649 272,484 268,800 275,480 281,269 250,000 125,000 0 12/5/14 12/12/14 12/19/14 12/26/14 1/2/15 1/9/15 1/16/15 $120.00 1.75 $95.00 1.5 $70.00 1.25 $45.00 1 $20.00 2010 1/23/15 20 11 2012 2013 Open Interest NYMEX RBOB 2015 WTI Net Long (Short) Position Net Long (Short) Position 1 contract = 42,000 gallons 1 contract = 42,000 gallons 0 76,971 78,248 82,672 12/5/14 12/12/14 12/19/14 12/26/14 77,522 78,352 68,060 72,965 50,000 25,000 0 January 28, 2015 1/2/15 1/9/15 1/16/15 1/9/15 1/16/15 1/23/15 (10,000) (20,000) (24,287) (30,000) (28,569) (28,613) (28,973) (28,451) (32,731) 12/5/14 12/12/14 12/19/14 12/26/14 1/2/15 77,596 # of contracts # of contracts 2014 NYMEX #2 Heating Oil 100,000 75,000 WTI ($/bbl) # of contracts 500,000 Oil Open Interest (MM Contracts) 2 1 contract = 1,000 barrels 1/23/15 (28,723) (31,669) (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) $0.00 $0.00 $0.00 1/9/15 1/16/15 1/23/15 16.0 12/5/14 12/12/14 12/19/14 12/26/14 $ per barrel ($1.00) 1/2/15 cents per gallon $0.00 ($0.87) ($1.43) ($2.00) ($1.28) ($1.88) ($3.00) 12.0 8.4 8.0 6.3 5.6 4.8 3.4 3.1 4.0 4.8 0.9 ($3.12) 0.0 12/5/14 ($4.00) 12/12/14 12/19/14 12/26/14 1/2/15 1/9/15 1/16/15 1/23/15 Gulf Coast/Europe Arbitrage: ULSD Persian Gulf-USGC: Freight Rate (250' dirty tanker) USGC-NWE Trailing 8 weeks (Net of Freight) $1.60 0.0 0.0 12/5/14 12/12/14 12/19/14 12/26/14 1/2/15 0.0 0.0 0.0 1/9/15 1/16/15 1/23/15 (0.6) (1.5) (1.7) (1.6) $1.20 $ per barrel cents per gallon 1.5 $1.05 $0.85 $0.92 $0.92 $0.85 $0.98 $0.98 1/16/15 1/23/15 $0.85 $0.80 $0.40 (3.0) (3.0) $0.00 12/5/14 12/12/14 12/19/14 12/26/14 (4.5) 1/2/15 1/9/15 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 Range '14 1 4 '15 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 5-yr Range '14 '15 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 January 28, 2015 Page 10 of 12 Weekly Refining Indicators Report WTI BRENT NYMEX WTI: 12-Month Strip ICE Brent: 12-Month Strip 68 68 62 62 $ per barrel $ per barrel Energy Futures 56 50 44 CL2 CL3 1/2/2015 CL4 CL5 CL6 1/9/2015 CL7 CL8 CL9 CL10 CL11 CL12 1/16/2015 CO1 1/23/2015 CO2 CO3 1/2/2015 CO4 CO5 CO6 CO7 1/9/2015 CO8 RBOB NYMEX RBOB: 12-Month Strip ICE RBOB: 12-Month Strip 185 185 170 170 155 140 125 CO9 CO10 CO11 CO12 1/16/2015 RBOB ¢ per gallon ¢ per gallon 50 44 CL1 1/23/2015 155 140 125 XB1 XB2 XB3 1/2/2015 XB4 XB5 XB6 XB7 1/9/2015 XB8 XB9 XB10 XB11 XB12 1/16/2015 PG1 PG2 PG3 1/2/2015 1/23/2015 PG4 PG5 PG6 PG7 1/9/2015 PG8 PG9 PG10 PG11 PG12 1/16/2015 1/23/2015 #2 HEATING OIL GASOIL NYMEX #2 Oil: 12-Month Strip ICE Gasoil: 12-Month Strip 200 200 185 185 ¢ per gallon ¢ per gallon 56 170 155 140 170 155 140 HO1 HO2 HO3 1/2/2015 HO4 HO5 HO6 1/9/2015 HO7 HO8 HO9 HO10 HO11 HO12 1/16/2015 QS1 1/23/2015 QS2 QS3 1/2/2015 QS4 QS5 QS6 QS7 1/9/2015 QS8 QS9 QS10 QS11 QS12 1/16/2015 1/23/2015 3-2-1 REFINING MARGIN 2-1-1 REFINING MARGIN NYMEX 3-2-1: 12-Month Strip ICE 2-1-1: 12-Month Strip 25.00 25.00 19.00 19.00 $ per barrel $ per barrel * Only 8 contracts available for European Gas Oil 13.00 7.00 1.00 13.00 7.00 1.00 1 2 1/2/2015 3 4 5 1/9/2015 6 7 8 9 1/16/2015 10 11 12 Avg. 1/23/2015 1 2 1/2/2015 3 4 5 6 1/9/2015 7 8 9 1/16/2015 10 11 12 Avg. 1/23/2015 * Only 8 contracts available for European Gas Oil January 28, 2015 Page 11 of 12 Weekly Refining Indicators Report 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. 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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