Ag-Land FS, Inc. Energy Market Update March 4, 2015 NYMEX Prices Close April Crude Oil April Gasoline April Heating Oil April Natural Gas Crude DOE Change Total 3Yr Avg. +10.3 444.4 363 $ $ $ $ Wk Change 51.99 1.9257 1.9013 2.769 Gasoline 5 Yr. Avg. 356 Change +0.046 $ $ $ $ +0.54 +.207 +.2023 -.125 Distillate Fuel Total 3Yr Avg. 5 Yr. Avg. 240.1 229 231 Change -1.722 Total 3Yr Avg. 5 Yr. Avg. 125.0 126 132 +6.500 to +2.200 +1.000 to -4.000 -0.000 to -3.600 Propane Total 55.1 -4.1 Midwest 16.8 -2.5 Gulf 34.3 -0.60 API’s Crude +2.900 Gasoline +0.530 Distillates -0.296 EST. Libyan oil production has jumped in recent days despite fresh attacks on fields and air raid near a terminal. Production is now running about 500,000 barrels a day. Saudi Arabia reversed course on its pricing tactics as Saudi Aramco said it was increasing its Asian prices for light oil delivery in April by $1.40 a barrel. In addition, they raised prices in the U.S. by $1.00 a barrel. Private-sector employment gains continued in February but at a slower pace than in the prior month. The Automatic Data Processing Inc. reported that employers added 212,000 jobs last month, below January’s revised gain to 250,000. Recent news reports have given a lot of attention to rig counts coming down because of the decline in crude oil prices. However, this is not the case with oil production in the Gulf of Mexico, as the downturn in oil prices is expected to have minimal direct impact on production in this reign. EIA projects Gulf of Mexico production to reach 1.52 million barrels per day in 2015 and 1.61 million barrels per day in 2016, or about 16% and 17% of total U.S. crude oil production in those two years. The U.S. is currently the largest global exporter of refined oil products, but Saudi Arabia plans to be number two by 2017. Increasing their refining capacity is part of their overall goal to increase global petroleum market share, and also to diversify its economy. Two new refineries will add 800,000 barrels/day in refining capacity this year, and a 400,000 barrel/day refinery in Jazan (completion by 2017) will increase their capacity to more than three million barrels/day. Most of the kingdom’s refining capacity has been overseas, with interests in the United States and Asia in partnership with other oil producers. Driving the need for refineries in the country have been an increase in domestic demand, and a need to provide jobs. Since the slump in crude oil prices, the refineries will also provide another source of income for them, as well as increase market share. Their long term plan over the next decade is to increase their refining capacity to eight million barrels/day – both in their country and abroad. China also intends to export more refined products this year. Currently China has refining capacity of 14 million barrels/day, but the government controls how much may be exported. World demand drove U.S. gasoline exports higher during the month of December. Monthly exports for gasoline jumped by more than 500,000 bbl/d from November to December when prices reached a 6 year low. Despite the jump, demand for distillate products continues to outpace gasoline exports by nearly double. Tax incentives help drive distillate demand in European countries, but their lack of refining capacity forces them to rely on U.S. product.