The Flowing Oil Chartbook June 10, 2015

Transcription

1 The Flowing Oil Chartbook June 10, 2015 RESEARCH TEAM Jan Stuart Research Analyst Johannes Van Der Tuin Research Analyst DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with com panies covered in its research re ports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of thi s report. Investors should consider this report as only a single factor in making their investm ent decision.

2 Table of Contents The Big Picture The International Scene Oil Macro US Gulf Coast (USGC) Permian Mid Continent West Coast East Coast Other Including VMT, Rack Margins, Tanker Fixtures & Other Items 2

3 Headlines What s Moving Demand (up) and inventories (down) help; Production not so much yet International rig activity continues to decline, a lead indicator of the supply rebalance According to the latest Baker Hughes data, compared to 2014 highs: European rigs are down 24%; Africa 35%; Latin America 20% and APAC 17%. Only the Middle East has had roughly stable rig levels, though here too there may be some signs of softening (pg. 34). Waiting on US production declines We strongly suspect that US crude oil production will decline mom and keenly await monthly data from the DoE. April is due at the end of June, and June data not until the end of August and we may have to wait that long to see a real MoM decline. In the meantime, at least global production is no longer growing sequentially though it stays well north of 1 Mb/d in year over year terms. Could a collapse in tanker fixtures and a roll in US production avert inventory stress through the winter It is too early to call the path of inventory in the winter maintenance season. Refining maintenance in Sep/Oct and Feb/Mar are some potholes the rebalance needs to navigate. We take some comfort from lower tanker fixtures, falling summer crude inventory and the potential roll in US crude production. We'll have more data and conviction in July/August. US crude spreads are narrow Understandable given peak summer crude runs and (possibly) rolling domestic crude production. Profitability is the combination of solid cracks offset by tight crude differentials. In particular, both Brent/ASCI and LLS/MARS are on the narrow side, in line with the more general recent trend of tight crude spreads and resilient refining margins (pg. 41). Gasoline cracks are strong Reflecting continued strength in global demand growth US gasoline continues to grow quite fast. The latest weekly data suggest that the pace of gasoline demand growth is approaching 4% (4wk ma, YoY). While we understand that the DoE may again be underestimating the export component, it s clear from the robust margin picture that record high refining production of MoGas is meeting real demand from somewhere. Spot West Coast margins have fallen dramatically But ended last week still elevated by ~$4.60/bbl yoy, a benefit to West Coast refiners. Brent flat price stuck in a narrowing range around $64/b And while it s true that absent clear fundamentals direction prices gyrated mostly in tune with FX and rates markets, we think it significant that both benchmark prices have held up well. That said, markets will need fresh new fundamentals catalysts to break out. Source: Credit Suisse Research 3

4 Headlines What s Moving Refining Margins & Spreads Focusing in on US dynamics Refining Margins: Weekly average PADD 3 (LLS) margins were higher by $1.20/bbl last week to $18.58/bbl. Average PADD 5 (ANS) cracks were down by $5.63/bbl to $24.62/bbl. Average PADD 1 (Brent) margins widened to $13.33/bbl (up 8% or.99/bbl) and PADD 2 (WTI) cracks decreased by $1.61/bbl to $21.07/bbl. PADD 4 (WTI) cracks shrank by $1.49/bbl to $35.42/bbl. Mid-Con Crude Spreads: The WTI-LLS narrowed this past week to -$4.34/bbl. A) Northern Mid-Con Diffs: LLS WCS diffs were down -$1.82/bbl to $11.93 /bbl, while Syncrude averaged a discount of $1.50/bbl vs LLS (as compared to a $1.13/bbl discount last week). LLS Bakken differentials narrowed to $4.80/bbl. B) Midland Diffs: The LLS Midland WTI spread averaged $4.76/bbl (down.63/bbl) while the average LLS- WTS spread narrowed by $1.20/bbl to $2.99/bbl. Gulf and West Coast Crude Spreads: The weekly Brent LLS spread averaged -$1.11/bbl. LLS MARS diffs narrowed somewhat, in this case by -.24/bbl to $3.24/bbl. The average LLS MAYA spread was around $6.65/bbl. The weekly average ANS KERN spread widened by.89/bbl from the previous week to $13.30/bbl. Source: Credit Suisse Research, Bloomberg, Platts 4

5 Headlines Key Charts to Watch The week s outstanding new data International production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) International land based rigs Total liquids production (ex-us & Canada) 75 J-11 J-12 J-13 J-14 J PADD I IV East of Rockies crude inventories (Mbs) year average US Gulf Coast gasoline cracks ($/b) (LLS based) $25 $20 $15 $10 $5 -$5 -$10 US oil demand growth by product (annual averages in kb/d, yoy) 2012/ / / E/2014E Others*** LPGs** Fuel oil -500 Jet fuel Diesel* Gasoline Source: Credit Suisse Research, EIA, Bloomberg, Platts, Baker Hughes 5

6 The Big Picture

7 The Big Picture Brent Structure Brent and WTI flat price with shaded area for Bollinger Bands ($/b) Brent Price Brent 200 mav $135 WTI Price WTI 200 mav $110 $85 $60 Brent futures curves ($/b) $120 6/10/2014 5/8/2015 6/2/2015 6/9/2015 $100 $80 $60 $35 J-11 J-12 J-13 J-14 J-15 $ Brent structure differentials (1-6) ($/b) $ $6 Backwardation: Bullish $4 $2 -$2 -$4 -$6 -$8 Contango: Bearish Brent physical vs. spot futures ($/b) $3 $2 $1 -$1 -$2 -$3 J-12 M-12 M-12 J-12 S-12 N-12 Source: Credit Suisse Research, Bloomberg 7

8 The Big Picture WTI-Brent & Product Futures Curves WTI Brent futures curves ($/b) 6/10/2014 5/8/2015 6/2/2015 6/9/2015 $- $(2) $(4) $(6) $(8) $(10) $(12) ICE Gasoil futures curves ($/MT) WTI futures curves ($/b) 6/10/2014 5/8/2015 6/2/2015 6/9/2015 $120 $100 $80 $60 $ RBOB futures curves ($/gal) $940 $840 $740 $640 6/10/2014 5/8/2015 6/2/2015 6/9/2015 $340 $290 $240 $190 $140 6/10/2014 5/8/2015 6/2/2015 6/9/2015 $540 $90 $ $ Source: Credit Suisse Research, Bloomberg 8

9 The Big Picture Key Crack Spreads from Around the US US Gulf Coast ($/b) (LLS based) $25 $20 $15 $10 $5 -$5 J US Mid-Continent ($/b) (WTI based) $60 $50 $40 $30 $20 $10 US East Coast ($/b) (Brent based) $20 $15 $10 $5 US West Coast ($/b) (ANS based) $50 $40 $30 $20 $10 J Source: Credit Suisse Research, Bloomberg, Platts 9

10 The Big Picture US Refinery Runs US crude runs (Mb/d) US crude inventories (Mbs) 17 5 year average year average Total utilization (% of total refinery operable capacity) 100% 5 year average % 80% Total US CDU maintenance forecast (kb/d of capacity offline) yr ave frcst 2015 actuals 70% 0 Source: Credit Suisse Research, EIA 10

11 The Big Picture PADDs I-IV PADD I IV East of Rockies crude runs (Mb/d) PADD I IV East of Rockies crude inventories (Mbs) year average year average PADDs I IV East of Rockies utilization (% of total refinery operable capacity) 100% 4 year average % PADD I IV East of Rockies CDU maintenance frcst (kb/d of capacity offline) yr ave frcst 2015 actuals 90% 85% % 0 Source: Credit Suisse Research, EIA 11

12 The Big Picture US Inventories and Forward Cover US crude inventories (Mbs) PADD I IV East of Rockies crude inventories (Mbs) year average year average US crude days of forward cover PADD I IV East of Rockies crude days of forward cover 32 5 year average year average Source: Credit Suisse Research, EIA 12

13 The Big Picture US Production and Imports US domestic crude production, weekly data (Mb/d) year average exit rate 2015 PADD I IV East of Rockies domestic crude production, monthly data (Mb/d) year average exit rate D US crude oil imports (Mb/d) 12 5 year average PADD I IV East of Rockies crude oil imports (Mb/d) 10 5 year average Source: Credit Suisse Research, EIA 13

14 The Big Picture Transport Differentials Map Source: VLO 14

15 The Big Picture US Storage Capacity Shell crude storage capacity (thousands of barrels) PADDs I II III IV V US Total In Operation Idle In Operation Idle In Operation Idle In Operation Idle In Operation Idle In Operation Idle Refineries 17,443 1,894 23,166 1,213 89,287 2,805 4, ,207 1, ,717 7,122 Tank Farms (excluding SPR) 4,908 1, ,063 2, ,385 7,235 15, ,660 1, ,982 12,444 Of which at Cushing, OK , Tankers, Barges and Pipes na SPR (Crude only) , Total (excluding SPR): 22,351 3, ,229 3, ,672 10,040 20, ,867 2, ,032 19,566 Working crude storage capacity (thousands of barrels) PADDs I II III IV V US Total Refineries 15,408 18,877 75,006 4,006 34, ,053 Of which is likely to be max fill in reality 13,082 17,375 58,037 3,461 29, ,359 Tank Farms (excluding SPR) 3, , ,614 13,139 27, ,879 Of which at Cushing, OK 70,812 70,812 Volumes in transit * ,000 SPR (Crude only) 727, ,000 Total (excluding SPR):** 21, , ,928 20,878 72, ,238 (*) Note: Volumes estimates based on March 4, 2015 note by EIA (**) Note: Total assumes a level of max fill at refineries below the EIA working capacity number Crude Oil Stocks (thousands of barrels) PADDs 6/5/2015 I II III IV V US Total Standard EIA stock number 16, , ,470 21,908 56, ,603 Crude storage capacity utilization (thousands of barrels) 6/5/2015 I II PADDs III IV V US Total Standard EIA stock number 77% 82% 70% 105% 78% 75% "Head Room" PADD I - IV East of Rockies 137,542 "Head Total shell Total Room" till capacity operable Total working Three week (incl. idle shell working Current capacity is average # of weeks 6/5/2015 capacity) capacity capacity * inventories full build till full PADD I - IV "East of Rockies" (excluding SPR): 557, , , , ,542-4,175 NA (*) Note: has been adjusted to account for oil in transit as well as a level of max fill at refineries below the EIA working capacity number Source: Credit Suisse Research, EIA 15

16 The Big Picture US Product Demand and Inventory US finished gasoline demand (Mb/d) US middle distillate demand (Mb/d) 10 5 year average year average US gasoline inventories (Mbs) US middle distillate inventories (Mbs) year average year average Source: Credit Suisse Research, EIA 16

17 The Big Picture QTD Spreads vs. CS Assumptions - WTI (Cushing) - WTS (Midland) QTD crude differentials are averaging $-0.50/bbl, $1.00/bbl below Credit Suisse's 2Q15 forecast of.50/bbl - LLS - MAYA (Light - Heavy) QTD crude differentials are averaging $8.27/bbl, $4.73/bbl below Credit Suisse's 2Q15 forecast of $13.00/bbl - Rockies (WTI based) QTD refining margins are averaging $33.15/bbl, $4.15/bbl above Credit Suisse's 2Q15 forecast of $29.00/bbl - ANS - KERN QTD crude differentials are averaging $12.50/bbl, $1.75/bbl below Credit Suisse's 2Q15 forecast of $14.25/bbl - LLS - WCS QTD crude differentials are averaging $15.38/bbl, $5.62/bbl below Credit Suisse's 2Q15 forecast of $21.00/bbl - West Coast (ANS based) QTD refining margins are averaging $30.92/bbl, $13.92/bbl above Credit Suisse's 2Q15 forecast of $17.00/bbl - US Gulf Coast (LLS based) QTD refining margins are averaging $16.67/bbl, $1.67/bbl above Credit Suisse's 2Q15 forecast of $15.00/bbl - Asia (Dubai based) QTD refining margins are averaging $12.52/bbl, $1.60/bbl above Credit Suisse's 2Q15 forecast of $10.92/bbl - Northeast (Brent based) QTD refining margins are averaging $12.11/bbl, $4.89/bbl below Credit Suisse's 2Q15 forecast of $17.00/bbl - Mid - Continent (WTI based) QTD refining margins are averaging $20.22/bbl, $2.11/bbl above Credit Suisse's 2Q15 forecast of $18.11/bbl - LLS - MARS (Medium - Sour) QTD crude differentials are averaging $3.12/bbl, $1.38/bbl below Credit Suisse's 2Q15 forecast of $4.50/bbl Source: Credit Suisse Research, Bloomberg, Platts 17

18 The International Scene

19 The International Scene Crude Spreads WTI Brent spread ($/b) Brent Dubai ($/b) $5 $8 $6 -$5 $4 -$10 $2 -$15 -$20 -$2 -$25 -$4 Brent Urals ($/b) $5 $4 $3 $2 $1 -$1 -$2 Arab Light MARS ($/b) $5 $4 $3 $2 $1 -$1 -$2 Source: Credit Suisse Research, Bloomberg 19

20 The International Scene Cracks (incl. PADD I & III) US East Coast ($/b) (Brent based) $20 $15 $10 $5 NW Europe ($/b) (Brent based) $14 $12 $10 $8 $6 $4 $2 J SING ($/b) (Dubai Fateh based) $20 $15 $10 $5 US Gulf Coast ($/b) (LLS based)) $25 $20 $15 $10 $5 -$5 J Source: Credit Suisse Research, Bloomberg 20

21 The International Scene CDU Outages Global reported CDU outages (Mb/d) World: ex-us, ex-fsu & ex-nwe reported CDU outages (Mb/d) NWE reported CDU outages (kb/d) 2, ,500 1, FSU reported CDU outages (kb/d) 2, ,000 1,500 1, Source: Credit Suisse Research, Bloomberg 21

22 The International Scene Refinery Runs OECD crude runs according to the IEA (Mb/d) 39 5 yr ave 2014 IEA Forecast D Original EU 16 refinery runs (Mb/d) Yr Average D Japan crude runs (Mb/d) 4,572 5 yr ave (b/d) 4,072 3,572 3,072 Global crude runs according to the IEA (Mb/d) 80 5 yr ave 2014 IEA Forecast ,572 D 72 D Source: Credit Suisse Research, Euroil, PAJ, IEA 22

23 The International Scene Crude & Product Inventories Original EU 16 crude inventories (Mbs) OECD crude inventories (Mbs) Yr Average ,200 1,100 5yr avg , D 800 D OECD gasoline inventories (Mbs) 420 5yr avg OECD diesel crude inventories (Mbs) 650 5yr avg D 400 D Source: Credit Suisse Research, Euroil, IEA 23

24 The International Scene European Product Inventories Original EU 16 gasoline inventories (Mbs) Yr Average D Original EU 16 middle distillate inventories (Mbs) Yr Average D Source: Credit Suisse Research, Euroil 24

25 The International Scene Chinese Runs & Product Flows China reported CDU outages (kb/d) 1, ,400 1,200 1, Chinese refinery crude runs (kb/d) ,000 10,500 10,000 9,500 9,000 8,500 D Chinese diesel net imports(+)/exports( ) (kb/d) Chinese gasoline net imports(+)/exports( ) (kb/d) D -200 D Source: Credit Suisse Research, Bloomberg, NBS 25

26 Oil Macro

27 Oil Macro Seasonally Adjusted Demand Global oil demand growth (SA, 3mma of monthly data on a LN scale) J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 Global oil demand data, mom and yoy 3 mma % change 5% 3 mma mom % change 3 mma yoy % change 4% 3% 2% 1% 0% -1% J-11 J-12 J-13 J-14 J % 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% OECD oil demand growth (SA, 3mma of monthly data on a LN scale) J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 OECD oil demand data, mom and yoy 3 mma % change 3% 2% 3 mma mom % change 3 mma yoy % change 1% 0% -1% -2% -3% J-11 J-12 J-13 J-14 J % 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% Source: Credit Suisse Research, IEA, EIA, JODI, Country Data 27

28 Oil Macro Seasonally Adjusted Demand (cont d) Non-OECD oil demand growth (SA, 3mma of monthly data on a LN scale) J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 Non-OECD oil demand data, mom and yoy 3 mma % change 3 mma mom % change 3 mma yoy % change 6% 4% 2% 0% J-11 J-12 J-13 J-14 J % 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% EM Asia ex-china (SA, 3mma of monthly data on a LN scale) J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 EM Asia ex-china oil demand data, mom and yoy 3 mma % change 7% 3 mma mom % change 3 mma yoy % change 5% 3% 1% -1% -3% J-11 J-12 J-13 J-14 J % 2.5% 1.5% 0.5% -0.5% -1.5% Source: Credit Suisse Research, IEA, JODI, Country Data 28

29 Oil Macro Seasonally Adjusted Demand, US US (SA, 3mma of monthly data on a LN scale) US oil demand data, mom and yoy 3 mma % change 6% 3 mma mom % change 3 mma yoy % change 4% 2% 0% 9.8-2% -4% 9.7 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16-6% A-11 A-12 A-13 A-14 US oil demand growth by product (annual averages in kb/d, yoy) 2012/ / / E/2014E Others*** LPGs** Fuel oil Jet fuel Diesel* Gasoline Source: Credit Suisse Research, IEA, EIA 29

30 Oil Macro Seasonally Adjusted Demand, Europe & China OECD Europe (SA, 3mma of monthly data on a LN scale) J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 OECD Europe oil demand data, mom and yoy 3 mma % change 4% 3 mma mom % change 3 mma yoy % change 2% 0% -2% -4% -6% J-11 J-12 J-13 J-14 J-15 China (SA, 3mma of monthly data on a LN scale) 11,500 11,000 10,500 10,000 9,500 9,000 8,500 adjusted demand 3mth average 8,000 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 China oil demand data, mom and yoy 3 mma % change China's oil product demand adjusted for gasoline and diesel inventory shifts YoY change kb/d ytd Apr* 2015 ytd Apr* Apr* 2015 ytd Gasoline 2,183 2,398 2,475 2,641 2, % 10.1% Kerosene % 23.1% Diesel 3,377 3,157 3,258 3,307 3, % 4.7% MD 3,831 3,648 3,750 3,912 4, % 7.2% Fuel oil % -22.3% LPG % 17.1% Naphtha 1,064 1,083 1,107 1,152 1, % 6.3% "Drive" 6,014 6,046 6,225 6,553 6, % 8.4% "Burn" 2,533 2,630 2,648 2,678 2, % 1.8% Total 8,547 8,676 8,872 9,231 9, % 6.4% * three month rolling average. "Drive" = gasoline + diesel + kerosene Source: Credit Suisse Research, IEA, JODI, NBS 30

31 Oil Macro Global Demand YoY % Change 1,000 b/d Base by quarter ( ) by year ( ) "norm" by year in kb/d % Q14 2Q14 3Q14 4Q14 1Q15E 2Q15E 3Q15E 4Q15E E 2016E E 2015E 2016E Global 92, % 0.7% 0.9% 1.4% 2.1% 2.1% 1.7% 1.4% 1.5% 0.9% 1.6% 1.0% 1.8% 1.7% 1.7% OECD 45, % -1.9% -1.3% -0.4% 1.4% 1.6% 0.8% 0.5% -1.0% -1.2% 0.3% -1.0% 1.1% 0.6% -1.7% Emerging Markets 46, % 3.3% 3.0% 3.2% 2.8% 2.6% 2.5% 2.3% 4.3% 3.1% 3.1% 3.0% 2.6% 2.7% 4.0% OECD Americas 24, % -0.9% -0.5% 0.6% 1.3% 2.7% 1.5% 0.9% -0.7% -1.6% 1.9% -0.1% 1.6% 1.6% -1.8% Canada 2, % -3.5% 0.4% -0.2% -1.1% 0.7% 1.2% 0.1% 1.2% 1.9% 3.6% -1.1% 0.2% 1.3% 0.1% Mexico 1, % -5.2% -3.6% -1.9% -4.3% -0.2% -0.5% -1.2% 1.5% -1.3% -2.0% -3.8% -1.5% 0.9% -0.8% USA 19, % 0.0% -0.2% 1.1% 2.4% 3.3% 1.7% 1.2% -1.2% -2.2% 2.1% 0.5% 2.1% 1.7% -2.1% South America 6, % 1.5% 2.2% 2.1% 0.1% 1.2% 1.4% 1.4% 3.6% 3.6% 4.4% 2.2% 1.1% 1.9% 4.5% Brazil 3, % 4.7% 4.4% 4.8% -1.3% 0.4% 0.8% 0.8% 3.8% 4.5% 4.7% 4.8% 0.2% 1.6% 5.4% Argentina % -8.5% -2.1% -1.4% 2.0% 2.0% 2.0% 2.0% 3.3% 6.2% 3.0% -2.7% 2.0% 3.0% 4.1% Europe 14, % -3.2% -0.8% -0.5% 3.8% 1.3% 0.9% 1.4% -2.8% -3.0% -1.0% -1.4% 1.8% 0.1% -2.3% France 1, % -5.7% -1.4% -1.6% 2.1% 1.5% 0.2% 1.2% -2.2% -1.2% -0.3% -3.5% 1.2% -0.6% -2.2% Germany 2, % -8.6% 1.5% 1.4% 6.7% 6.2% 4.7% 5.0% -3.0% -0.1% 1.9% -1.5% 5.6% -1.5% -0.1% Italy 1, % -5.4% -6.3% -6.0% 0.9% -0.1% -0.1% 0.0% -3.3% -8.3% -4.0% -6.1% 0.2% 0.0% -4.5% UK 1, % -2.7% -1.2% 2.5% 3.9% -1.0% -0.9% -1.0% -2.6% -3.2% -1.4% -0.1% 0.2% -0.9% -2.7% Oth Europe 7, % -0.6% -0.4% -0.4% 3.6% 0.4% 0.4% 1.0% -2.8% -3.2% -1.5% -0.4% 1.3% 1.1% -2.4% FSU 4, % 2.6% 1.4% 2.7% -3.0% -3.0% -3.0% -3.0% 8.1% 3.0% 3.6% 3.7% -3.0% -2.0% 2.2% Mideast 8, % 5.7% 2.7% 3.9% 4.7% 3.3% 4.4% 3.7% 4.4% 2.5% 3.5% 3.9% 4.0% 4.1% 4.1% Saudi Arabia 3, % 13.3% 8.8% 9.1% 5.0% 3.0% 3.0% 3.0% 5.0% 4.9% 2.3% 9.4% 3.4% 3.0% 7.1% Iran 1, % -1.0% -2.0% -2.0% 3.0% 3.0% 4.0% 4.0% 4.1% -0.7% 5.0% -2.0% 3.5% 4.0% 0.3% Iraq % 0.1% -11.5% 13.3% 5.2% 3.0% 15.0% 5.0% 9.2% 9.6% 7.2% 1.9% 7.0% 10.0% 13.2% Africa 3, % 3.4% 7.5% 2.6% 2.8% 3.8% 3.9% 3.7% -1.4% 2.1% 3.1% 3.4% 3.6% 3.7% 3.7% Asia-Pac 30, % 1.8% 1.2% 1.7% 2.4% 2.5% 2.0% 1.7% 4.0% 3.4% 1.2% 1.4% 2.2% 2.1% 3.2% China 10, % 2.0% 3.8% 5.6% 6.2% 4.8% 3.2% 3.2% 4.8% 4.1% 2.2% 2.5% 4.3% 3.3% 6.4% India 3, % 5.4% 5.8% 4.7% 4.6% 5.4% 4.5% 4.5% 5.1% 5.7% 1.5% 4.7% 4.8% 4.0% 3.7% Indonesia 1, % 9.8% -1.4% 0.7% -0.7% -0.9% 2.9% 0.3% 8.9% 2.8% 4.0% 5.0% 0.4% 1.5% 5.3% Japan 4, % -4.8% -9.0% -6.0% -5.8% -3.8% -2.9% -4.4% 2.6% 3.6% -3.9% -5.0% -4.3% -2.8% -1.1% South Korea 2, % 1.1% 2.5% -0.3% 5.5% 2.0% 0.1% 1.2% -0.4% 2.8% 0.1% 1.1% 2.2% 1.0% 0.8% Australia 1, % 0.0% 0.0% 0.0% 1.1% 0.6% 0.6% 1.2% 4.3% 2.4% 0.8% 0.0% 0.9% 1.0% 1.7% Thailand 1, % 2.8% 0.9% -0.9% 0.6% 2.0% 2.5% 2.5% 5.2% 6.3% 2.7% 0.8% 1.9% 3.0% 3.7% Source: Credit Suisse Research, IEA, EIA, JODI 31

32 Oil Macro Global Supply Table Oil Supply in kbd 1Q14 2Q14 3Q14 4Q Q15E 2Q15E 3Q15E 4Q15E 2015E 2016E 2017E Global Oil 92,639 93,043 93,482 94,859 93,512 95,153 95,149 94,686 95,192 95,044 95,758 96,952 Opec all oil 36,520 36,411 36,720 36,686 36,585 36,644 37,227 37,314 37,456 37,163 38,145 38,774 Non Opec 53,890 54,201 54,472 55,924 54,627 56,235 55,441 55,037 55,443 55,536 55,221 55,782 Non Opec EX us 41,886 41,365 41,298 42,297 41,712 42,500 41,562 41,420 42,142 41,904 41,857 41,315 North America 19,728 20,432 20,710 21,333 20,556 21,477 21,268 21,041 20,913 21,173 20,866 21,967 US 12,004 12,835 13,174 13,627 12,915 13,735 13,879 13,617 13,301 13,632 13,363 14,466 Canada 4,311 4,158 4,209 4,433 4,278 4,528 4,190 4,294 4,533 4,386 4,487 4,597 Mexico 2,856 2,831 2,756 2,711 2,788 2,646 2,579 2,546 2,505 2,568 2,418 2,288 South America 8,343 8,377 8,511 8,713 8,487 8,762 8,675 8,688 8,750 8,719 8,743 8,784 Venezuela 2,850 2,806 2,756 2,811 2,805 2,845 2,805 2,733 2,772 2,788 2,704 2,754 Brazil 2,625 2,722 2,886 3,012 2,813 3,033 3,031 3,085 3,096 3,061 3,156 3,206 Argentina Columbia , , , Europe 4,369 4,204 4,110 4,383 4,266 4,375 4,232 4,148 4,418 4,293 4,248 4,005 Norw ay 1,896 1,778 1,873 1,942 1,872 1,937 1,809 1,914 1,987 1,912 1,841 1,671 United Kingdom FSU 14,169 14,050 13,990 14,117 14,081 14,308 14,218 14,114 14,263 14,225 14,251 14,148 Russia 10,825 10,793 10,696 10,856 10,793 10,946 10,944 10,845 10,950 10,921 10,955 10,875 Kazakhstan 1,780 1,713 1,749 1,800 1,761 1,802 1,720 1,750 1,801 1,769 1,754 1,814 Azerbaijan Middle East 28,776 28,760 28,686 28,622 28,711 28,757 29,373 29,511 29,597 29,312 30,494 30,874 Saudi Arabia 11,562 11,551 11,717 11,406 11,559 11,518 12,034 12,158 12,158 11,969 12,015 12,094 Iran 3,748 3,669 3,487 3,612 3,629 3,511 3,733 3,700 3,700 3,662 4,451 4,400 UAE 3,505 3,594 3,681 3,601 3,596 3,639 3,647 3,683 3,612 3,645 3,645 3,673 Kuw ait 3,093 3,024 3,034 3,016 3,042 3,078 2,872 2,900 2,926 2,943 2,928 3,030 Iraq 3,287 3,389 3,246 3,555 3,369 3,559 3,701 3,707 3,858 3,707 4,121 4,368 Qatar 2,021 1,980 1,981 1,921 1,975 1,937 1,960 1,957 1,955 1,952 1,916 1,930 Africa 8,304 8,229 8,645 8,603 8,447 8,407 8,273 8,238 8,228 8,286 8,139 8,288 Nigeria 2,288 2,340 2,275 2,248 2,287 2,221 2,200 2,200 2,200 2,205 2,100 2,100 Algeria 1,525 1,573 1,589 1,522 1,553 1,589 1,528 1,525 1,510 1,538 1,476 1,431 Libya Angola 1,682 1,670 1,780 1,797 1,733 1,835 1,808 1,832 1,843 1,830 1,862 1,800 Sudan Asia 8,950 8,992 8,829 9,087 8,964 9,067 9,110 8,947 9,024 9,037 9,018 8,886 Indonesia China 4,210 4,219 4,153 4,305 4,222 4,254 4,265 4,137 4,244 4,225 4,261 4,231 India Source: Credit Suisse Research, IEA, EIA, JODI, Petrologistics 32

33 Oil Macro Global Supply ex-saudi Arabia Global production ex-saudi Arabia (Mb/d) Non-OPEC production ex US (rhs) vs. US production (lhs) 8,000 40, US CAGR: = 1.77% 6,000 38, Jan. '15 = 11.88% 73 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 4,000 36,000 J-04J-05J-06J-07J-08J-09J-10J-11J-12J-13J-14J-15 14,000 12,000 10,000 Non-Opec (ex-us) CAGR: = 0.70% Jan. '15 = -0.31% 46,000 44,000 42,000 US production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) Rigs Production Europe production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) Rigs Production F-11 F-12 F-13 F-14 F F-11 F-12 F-13 F-14 F-15 0 Source: Credit Suisse Research, IEA, EIA, JODI, Petrologistics, Baker Hughes, Country Data 33

34 Oil Macro Regional Rig Counts & Production Latin America production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) 8500 Rigs Production Africa production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) Rigs Production F-11 F-12 F-13 F-14 F F-11 F-12 F-13 F-14 F-15 0 Asia Pacific production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) Rigs Production Middle East production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) Rigs Production F-11 F-12 F-13 F-14 F F-11 F-12 F-13 F-14 F-15 0 Source: Credit Suisse Research, IEA, EIA, JODI, Petrologistics, Baker Hughes, Country Data 34

35 Oil Macro Declining Production Tracker OPEC and Non-OPEC seasonally adjusted decline tracker (mom rhs, yoy lhs) 4% 3 mma mom % change 3 mma yoy % chane 2.0% 1.5% 2% 1.0% 0.5% 0% 0.0% -0.5% -2% -1.0% J-10 J-11 J-12 J-13 J-14 J-15 Non-OPEC seasonally adjusted decline tracker (mom rhs, yoy lhs) 4% 3 mma mom % change 3 mma yoy % chane 2% 0% -2% J-10 J-11 J-12 J-13 J-14 J % 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% OPEC seasonally adjusted decline tracker (mom rhs, yoy lhs) 4% 2% 0% -2% -4% 3 mma mom % change 3 mma yoy % chane -6% J-10 J-11 J-12 J-13 J-14 J-15 Note: Includes Angola, Nigeria, Algeria, Ecuador, Venezuela 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% Note: Includes Russia, Mexico, Kazakhstan, Brazil, Canada, Azerbaijan, Norway, Colombia, Indonesia, US GoM, UK, Egypt, Malaysia, Argentina, Thailand, Equitorial Guinea, Australia A look at production in those regions/countries most vulnerable to decline. Source: Woodmac, Credit Suisse estimates 35

36 Oil Macro Global Balances (Demand) Demand Q1-'13 Q2-'13 Q3-'13 Q4-' Q1-'14 Q2-'14 Q3-'14 Q4-' Q1-'15E Q2-'15E Q3-'15E Q4-'15E 2015E 2016E 2017E Global YoY Growth, net mb/d YoY Growth, % 3.5% 1.5% 0.9% 1.9% 1.8% 1.6% 1.3% 1.6% 1.1% 0.7% 0.9% 1.4% 1.0% 2.1% 2.1% 1.7% 1.4% 1.8% 1.7% 1.0% OECD YoY Growth, net mb/d YoY Growth, % 1.4% -1.0% -1.2% -0.8% 0.2% 0.9% 0.7% 0.3% -0.3% -1.9% -1.3% -0.4% -1.0% 1.4% 1.6% 0.8% 0.5% 1.1% 0.6% -1.5% Americas YoY Growth, net mb/d YoY Growth, % 2.0% -0.7% -1.6% 1.9% 1.0% 2.1% 2.5% 1.9% 0.3% -0.9% -0.5% 0.6% -0.1% 1.3% 2.7% 1.5% 0.9% 1.6% 1.6% 0.1% Europe YoY Growth, net mb/d YoY Growth, % 0.0% -2.9% -2.9% -4.1% 0.0% 0.7% -0.9% -1.1% -1.5% -3.5% -1.0% -0.5% -1.6% 3.8% 1.2% 0.8% 1.4% 1.8% -0.1% -2.3% Asia Pacific YoY Growth, net mb/d YoY Growth, % 2.1% 1.9% 3.1% -2.6% -1.7% -2.5% -1.4% -2.1% 0.1% -2.2% -4.2% -3.4% -2.4% -1.6% -1.2% -1.3% -1.8% -1.5% -1.0% -4.8% Non-OECD YoY Growth, net mb/d YoY Growth, % 6.0% 4.3% 3.1% 4.9% 3.4% 2.3% 1.8% 3.1% 2.6% 3.3% 3.0% 3.2% 3.0% 2.8% 2.6% 2.5% 2.3% 2.6% 2.7% 3.3% Former Soviet Union YoY Growth, net mb/d YoY Growth, % 2.3% 8.1% 3.0% 1.3% 2.8% 4.6% 5.3% 3.6% 8.7% 2.6% 1.4% 2.7% 3.7% -3.0% -3.0% -3.0% -3.0% -3.0% -2.0% -0.5% China YoY Growth, net mb/d YoY Growth, % 13.7% 4.8% 4.1% 5.8% 4.1% 1.9% -2.4% 2.2% -1.6% 2.0% 3.8% 5.6% 2.5% 6.2% 4.8% 3.2% 3.2% 4.3% 3.3% 1.2% Other emerging Asia YoY Growth, net mb/d YoY Growth, % 5.5% 4.9% 3.0% 3.8% 2.2% 2.4% 2.6% 2.8% 3.8% 4.3% 2.4% 1.9% 3.1% 2.2% 2.8% 3.1% 2.7% 2.7% 2.8% 3.9% South America YoY Growth, net mb/d YoY Growth, % 5.4% 3.6% 3.6% 4.4% 4.3% 5.0% 4.0% 4.4% 3.1% 1.5% 2.2% 2.1% 2.2% 0.1% 1.2% 1.4% 1.4% 1.1% 1.9% 4.6% Mideast YoY Growth, net mb/d YoY Growth, % 2.4% 4.4% 2.5% 7.3% 2.8% 1.8% 2.5% 3.5% 3.3% 5.7% 2.7% 3.9% 3.9% 4.7% 3.3% 4.4% 3.7% 4.0% 4.1% 4.4% Africa YoY Growth, net mb/d YoY Growth, % 4.4% -1.4% 2.1% 8.4% 6.8% -3.9% 1.4% 3.1% 0.5% 3.4% 7.5% 2.6% 3.4% 2.8% 3.8% 3.9% 3.7% 3.6% 3.7% 5.1% Source: Credit Suisse Research, IEA, JODI, EIA, NBP, ANP 36

37 Oil Macro Global Balances (Supply) Supply Q1-'13 Q2-'13 Q3-'13 Q4-' Q1-'14 Q2-'14 Q3-'14 Q4-' Q1-'15E Q2-'15E Q3-'15E Q4-'15E 2015E 2016E 2017E Global YoY Growth, net mb/d YoY Growth, % 2.9% 1.1% 2.6% 0.4% 0.8% 1.5% 0.9% 0.9% 1.3% 1.3% 1.8% 2.8% 1.8% 2.7% 2.3% 1.3% 0.4% 1.6% 0.8% 1.2% Non OPEC YoY Growth, net mb/d YoY Growth, % 2.5% 0.4% 1.4% 1.4% 2.6% 3.5% 2.8% 2.6% 3.3% 4.3% 4.2% 4.4% 4.1% 4.4% 2.3% 1.0% -0.9% 1.7% -0.6% 1.0% North America YoY Growth, net mb/d YoY Growth, % 4.2% 3.6% 8.2% 6.7% 7.5% 10.3% 7.7% 8.0% 8.9% 12.7% 10.8% 10.6% 10.8% 9.1% 4.2% 1.6% -2.1% 3.0% -1.5% 5.3% South America YoY Growth, net mb/d YoY Growth, % 5.2% 1.3% -0.8% -3.0% 1.4% 3.2% 2.0% 0.9% 3.2% 3.5% 6.5% 7.8% 5.3% 8.8% 6.2% 3.9% 1.4% 5.0% 1.8% -0.5% Europe YoY Growth, net mb/d YoY Growth, % -7.0% -7.8% -6.1% -9.2% -7.0% -0.3% 1.4% -4.0% 2.0% -1.3% -0.2% 2.6% 0.8% -0.1% 0.5% 0.8% 0.7% 0.5% -1.4% -5.8% FSU YoY Growth, net mb/d YoY Growth, % 2.8% 1.7% 0.4% 1.5% 1.9% 2.1% 1.7% 1.8% 0.5% -0.1% -0.3% -0.9% -0.2% 1.0% 1.2% 0.9% 1.0% 1.0% 0.1% -0.8% Russia YoY Growth, net mb/d YoY Growth, % 3.2% 2.7% 1.0% 1.3% 1.9% 1.4% 0.9% 1.4% 0.6% 0.2% -0.5% 0.0% 0.1% 1.1% 1.4% 1.4% 0.9% 1.2% 0.3% -0.7% Africa YoY Growth, net mb/d YoY Growth, % -0.3% -4.8% -9.1% -4.4% 1.8% 0.9% 2.2% 0.1% 3.1% 1.3% 2.9% 0.1% 1.8% 0.1% -1.6% -2.8% -3.7% -2.0% -0.3% 0.2% Mideast YoY Growth, net mb/d YoY Growth, % 2.0% -3.9% -12.9% -2.2% -9.8% -10.2% -9.9% -8.1% -3.9% -0.2% -2.1% -3.4% -2.4% -3.8% -9.9% -10.6% -9.9% -8.6% -1.7% -3.5% Asia YoY Growth, net mb/d YoY Growth, % 4.3% -1.1% 1.6% 0.8% 1.8% -2.3% -1.8% -0.4% -1.6% -1.3% -0.5% 0.9% -0.6% 1.3% 1.3% 1.3% -0.8% 0.7% -0.3% -1.6% Processing gain OPEC YoY Growth, net mb/d YoY Growth, % 3.6% 2.0% 4.3% -1.0% -1.7% -1.3% -1.9% -1.5% -1.6% -2.9% -1.7% 0.5% -1.4% 0.3% 2.2% 1.6% 2.1% 1.6% 2.6% 1.6% Opec Crude Oil YoY Growth, net mb/d YoY Growth, % 3.0% 1.4% 3.9% -2.7% -3.7% -3.2% -3.9% -3.4% -1.5% -2.9% -1.5% 1.2% -1.2% 0.7% 2.7% 2.1% 2.5% 2.0% 3.3% 1.4% Saudi Arabia YoY Growth, net mb/d YoY Growth, % 6.8% 9.2% 3.8% -5.0% -7.4% 2.3% 2.6% -1.9% 5.9% 3.1% -3.2% -2.6% 0.6% -0.6% 3.9% 3.5% 6.5% 3.3% 0.4% -0.2% Opec non-crude YoY Growth, net mb/d YoY Growth, % 7.0% 5.2% 6.2% 8.0% 8.5% 8.8% 8.3% 8.4% -2.0% -2.6% -2.7% -2.8% -2.5% -1.3% -0.1% -0.6% 0.2% -0.5% -0.4% 2.7% Source: Credit Suisse Research, IEA, Petrologistics, EIA, NBP, ANP 37

38 Oil Macro Global Balances (Inventories) Balance, stocks Q1-'13 Q2-'13 Q3-'13 Q4-' Q1-'14 Q2-'14 Q3-'14 Q4-' Q1-'15E Q2-'15E Q3-'15E Q4-'15E 2015E 2016E 2017E Implied inventory change Reported oil inventory: OECD stock change OECD inventory (billion barrels) Cover, days demand 'Call on Opec & stocks" YoY Growth, net mb/d YoY Growth, % 4.8% 2.5% -1.2% 1.7% -0.9% -2.9% -2.7% -1.2% -2.1% -4.9% -4.1% -3.0% -3.6% -2.0% 2.8% 3.5% 5.9% 2.6% 11.6% 9.6% 'Call on Saudi & stocks" YoY Growth, net mb/d YoY Growth, % 13.4% 12.5% -12.0% 11.5% 1.9% 3.4% 6.2% 5.5% 4.3% -3.3% -11.1% -14.8% -7.0% -9.7% 4.3% 8.2% 18.0% 5.6% 9.8% -2.4% Source: Credit Suisse Research, IEA, JODI, EIA, NBP, ANP 38

39 US Gulf Coast (USGC)

40 USGC Crude Spreads Brent LLS ($/b) $20 $15 $10 $5 -$5 LLS Houston ($/b) $8 $6 $4 $2 -$10 -$2 J-13 O-13 J-14 A-14 J-14 O-14 J-15 A-15 Houston WTI ($/b) $15 $10 $5 -$5 J-13 O-13 J-14 A-14 J-14 O-14 J-15 A-15 LLS MARS ($/b) $8 $7 $6 $5 $4 $3 $2 $1 J Source: Credit Suisse Research, Bloomberg 40

41 USGC Crude Spreads (cont d) LLS MAYA ($/b) RFO LLS ($/b) $25 $20 -$5 $15 -$10 $10 -$15 $5 -$20 J -$25 Brent ASCI ($/b) $25 $20 $15 $10 $5 -$5 Arab Light MARS ($/b) $5 $4 $3 $2 $1 -$1 -$2 Source: Credit Suisse Research, Bloomberg 41

42 USGC Crack Spreads and Refining Margins US Gulf Coast gasoline cracks ($/b) (LLS based) $25 $20 $15 $10 $5 -$5 -$10 US Gulf Coast distillate cracks ($/b) (LLS based) $30 $25 $20 $15 $10 $5 US Gulf Coast gasoline cracks ($/b) (WTI based) $50 $40 $30 $20 $10 US Gulf Coast distillate cracks ($/b) (WTI based) $50 $40 $30 $20 $10 -$10 Source: Credit Suisse Research, Bloomberg 42

43 USGC Crack Spreads and Refining Margins (cont d) US Gulf Coast ($/b) (WTI based) $50 $40 $30 $20 $10 US Gulf Coast ($/b) (LLS based)) $25 $20 $15 $10 $5 J -$5 J US Gulf Coast ($/b) (MAYA based) $35 $30 $25 $20 $15 $10 $5 J VGO cracks vs LLS Gulf Coast crack ($/b) $30 VGO crack LLS crack $20 $10 -$10 -$20 J-09 J-10 J-11 J-12 J-13 J-14 J-15 Source: Credit Suisse Research, Bloomberg 43

44 USGC PADD III Refinery Runs PADD III crude runs (Mb/d) PADD III crude inventories (Mbs) year average year average PADD III utilization (% of total refinery operable capacity) 100% 4 year average % PADD III CDU maintenance forecast (kb/d of capacity offline) yr ave frcst 2015 actuals % % 0 Source: Credit Suisse Research, EIA 44

45 USGC PADD III Inventories and Crude Flows PADD III crude inventories (Mbs) PADD III crude days of forward cover year average year average PADD III domestic crude production, monthly data (Mb/d) 5 year average exit rate PADD III crude oil imports (Mb/d) 8 5 year average D 2 Source: Credit Suisse Research, EIA 45

46 USGC PADD III Storage Capacity and Detail PADD III crude inventories and forecast (Mbs) J-10 J-11 J-12 J-13 J-14 J-15 March-15 PADD III Working crude storage capacity (thousands of barrels) Total Shell capacity (incl. idle capacity) Total operable shell capacity Total working capacity Current inventories PADD III refineries 92,092 89,287 58,037 49,321 Texas Inland 2,099 Texas Gulf Coast 27,707 La. Gulf Coast 17,900 N. La., Ark 1,284 New Mexico 331 Tank farms (excluding SPR) 249, , , ,589 6/5/2015 PADD III Working crude storage capacity (thousands of barrels) Total Shell capacity (incl. idle capacity) Total operable shell capacity Total working capacity * Current inventories "Head Room" till working capacity is full # of weeks till full Three week average build PADD III (excluding SPR): 341, , , , ,458-2,139 NA (*) Note: has been adjusted to account for oil in transit as well as a level of max fill at refineries below the EIA working capacity number Source: Credit Suisse Research, EIA 46

47 Permian

48 Permian Crude Spreads WTI (Cushing) WTI (Midland) ($/b) $25 $20 $15 $10 $5 WTI (Cushing) WTS (Midland) ($/b) $25 $20 $15 $10 $5 -$5 -$5 J Permian basin crude production (kb/d) Permian Region 2,500 2,000 1,500 1,000 Permian rig count Permian 500 J-07 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J F-11 F-12 F-13 F-14 F-15 Source: Credit Suisse Research, Bloomberg, EIA, Baker Hughes 48

49 Permian Pipeline Map Permian pipeline map Source: Pioneer Natural Resources 49

50 Mid - Continent

51 Mid Continent Crude Spreads WTI LLS ($/b) $5 -$5 -$10 -$15 -$20 -$25 WCS Canadian Heavy LLS ($/b) -$10 -$20 -$30 -$40 -$50 -$60 -$70 Syncrude LLS ($/b) $5 -$5 -$10 -$15 -$20 -$25 Bakken (Clearbrook) LLS ($/b) -$5 -$10 -$15 -$20 -$25 -$30 Source: Credit Suisse Research, Bloomberg 51

52 Mid Continent Crack Spreads and Product Differentials US Mid-Continent Cushing ($/b) (WTI based) $60 $50 $40 $30 $20 $10 US Rockies ($/b) (WTI based) $50 $40 $30 $20 $10 J Mid-Con USGC gasoline price ($/b) $50 $40 $30 $20 $10 -$10 -$20 J Mid-Con USGC distillate price ($/b) $30 $25 $20 $15 $10 $5 -$5 -$10 J Source: Credit Suisse Research, Bloomberg 52

53 Mid Continent PADD II Refinery Runs PADD II crude runs (Mb/d) PADD II crude inventories (Mbs) year average year average PADD II utilization (% of total refinery operable capacity) 110% 4 year average % 90% 80% PADD II CDU maintenance forecast (kb/d of capacity offline) yr ave frcst 2015 actuals 70% 0 Source: Credit Suisse Research, EIA 53

54 Mid Continent PADD IV Refinery Runs PADD IV crude runs (Mb/d) PADD IV inventories (Mbs) year average year average PADD IV utilization (% of total refinery operable capacity) 110% 4 year average % 90% 80% PADD IV CDU maintenance forecast (kb/d of capacity offline) yr ave frcst 2015 actuals 70% 0 Source: Credit Suisse Research, EIA 54

55 Mid Continent PADD II & IV Inventories and Crude Flows PADD II crude inventories (Mbs) PADD IV inventories (Mbs) year average year average PADD II + IV domestic crude production, monthly data (Mb/d) year average exit rate PADD II + IV crude oil imports (Mb/d) year average D 1.0 Source: Credit Suisse Research, EIA 55

56 Mid Continent PADD II Product Stocks/Storage Capacity PADD II total gasoline inventories (Mbs) 60 5 year average PADD II total middle distillate inventories (Mbs) year average March-15 PADD II Working crude storage capacity (thousands of barrels) Total Shell capacity (incl. idle capacity) Total operable shell capacity Total working capacity Current inventories PADD II refineries 24,379 23,166 17,375 15,497 Tank farms (excluding SPR) 144, , , ,186 Cushing Ok 85,116 84,969 70,812 59,357 6/5/2015 PADD II Working crude storage capacity (thousands of barrels) Total Shell capacity (incl. idle capacity) Total operable shell capacity Total working capacity * Current inventories "Head Room" till working capacity is full # of weeks till full Three week average build PADD II (excluding SPR): 169, , , ,515 30,084-1,309 NA Cushing Ok 85,116 84,969 70,812 58,003 12, NA (*) Note: has been adjusted to account for oil in transit as well as a level of max fill at refineries below the EIA working capacity number Source: Credit Suisse Research, EIA 56

57 West Coast

58 West Coast Crude & Crack Spreads ANS KERN ($/b) $25 $20 $15 $10 $5 US West Coast ($/b) (ANS based) $50 $40 $30 $20 $10 J Source: Credit Suisse Research, Bloomberg 58

59 West Coast PADD V Refinery Runs PADD V crude runs (Mb/d) PADD V crude inventories (Mbs) 3 5 year average year average PADD V utilization (% of total refinery operable capacity) 100% 4 year average % 80% 70% PADD V CDU maintenance forecast (kb/d of capacity offline) yr ave frcst 2015 actuals 60% 0 Source: Credit Suisse Research, EIA 59

60 West Coast PADD V Inventories and Crude Flows PADD V crude inventories (Mbs) PADD V crude days of forward cover 65 5 year average year average PADD V domestic crude production, monthly data (Mb/d) year average exit rate 2015 PADD V crude oil imports (Mb/d) year average D 0.0 Source: Credit Suisse Research, EIA 60

61 West Coast Gasoline Sales and Usage PADD V gasoline inventories (Mbs) 40 5 year average PADD V diesel inventories (Mbs) 17 5 year average PADD 5 finished motor gasoline demand (kb/d) SA T 13 Trend J-95 J-97 J-99 J-01 J-03 J-05 J-07 J-09 J-11 J-13 J-1 California Vehicle Miles Traveled (VMT, in billions) T 13 trend J-95 J-97 J-99 J-01 J-03 J-05 J-07 J-09 J-11 J-13 J-15 Source: Credit Suisse Research, EIA, California Department of Transportation 61

62 West Coast PADD V Storage Capacity and Detail March-15 PADD V Working crude storage capacity (thousands of barrels) Total Shell capacity (incl. idle capacity) Total operable shell capacity Total working capacity Current inventories PADD V refineries 40,257 39,207 29,405 24,207 Tank farms (excluding SPR) 34,929 33,660 27,899 30,195 6/5/2015 PADD V Working crude storage capacity (thousands of barrels) Total Shell capacity (incl. idle capacity) Total operable shell capacity Total working capacity * Current inventories "Head Room" till working capacity is full # of weeks till full Three week average build PADD V (excluding SPR): 75,186 72,867 72,940 56,847 16, (*) Note: has been adjusted to account for oil in transit as well as a level of max fill at refineries below the EIA working capacity number Source: Credit Suisse Research, EIA 62

63 East Coast

64 East Coast Product Cracks & Gasoline Demand US East Coast ($/b) (Brent based) $20 $15 $10 $5 US East Coast gasoline cracks ($/b) (Brent based) $25 $20 US East Coast diesel cracks ($/b) (Brent based) $ $35 $30 $25 $20 $15 $10 $5 PADD I gasoline demand, monthly data (kb/d) 3,600 5 year average ,400 $15 3,200 $10 $5 3,000 2,800 D Source: Credit Suisse Research, Bloomberg, Platts, EIA 64

65 East Coast Structural Changes in the North East East Coast Refining Capacity vs. Regional Demand (kb/d, unless otherwise noted) Capacity % of Capacity Demand Capacity as a % of Demand Capacity % of Capacity Philadelphia % % St. John % % Bayway % % Quebec City % % Trainer % % Delaware City % % Paulsboro % % United % % Ergon % % Hovensa % 0 0.0% Aruba % 0 0.0% Marcus Hook % 0 0.0% Earle Point % 0 0.0% Montreal % 0 0.0% Yorktown % 0 0.0% Demand Capacity as a % of Demand Total* % % % % (*) Note: Numbers include estimates for Quebec and the Canadian Maritime Provinces 2008 Today Source: Credit Suisse Research, EIA, CAPP, Company Data 65

66 Other

67 Other Wholesale & Retail Margins, LPGs & VMT Rack margins, spread vs. Gulf Coast price ($/gal) $1.00 Tampa Jacksonville Atlanta (Athens) Chicago (East Chicago).50 US LPG Margins WTI ($/b) $50 $25 $- Ethane Propane Normal Butane Isobutane Natural Gasoline $(25).00 $(50) $(75) -.50 M-13 J-13 S-13 D-13 M-14 J-14 S-14 D-14 M-15 $(100) J-11 J-12 J-13 J-14 J-15 Weekly US retail composite margins (c/gal).70 5 yr avg Vehicle Miles Traveled (LHS) vs. US gasoline demand (kb/d) VMT US MoGas demand (kb/d) J-00 J-02 J-04 J-06 J-08 J-10 J-12 J Source: Credit Suisse Research, Bloomberg, EIA, DoT, U. Michigan TRI 67

68 Other Fuel Efficiency & Tanker Fixtures Apparent fuel efficiency (seasonally adjusted VMT/gasoline demand) Apparent fuel efficiency Average sales-weighted fuel-economy rating of new car sales Sales weighted MPG J-02 J-04 J-06 J-08 J-10 J-12 J-14 Total tanker fixture volumes into the US (Mb/d) Total tanker fixture volumes into the US J-12 J-12 J-13 J-13 J-14 J-14 J-15 Outgoing tanker fixtures from the Arabian Gulf Total fixtures out of AG (CS estmates) A-10 O-10 A-11 O-11 A-12 O-12 A-13 O-13 A-14 O-14 A-15 Source: Credit Suisse Research, Bloomberg, EIA, DoT, U. Michigan TRI, MAREX, Clarksons 68

69 East Coast EQuivalent Breakeven margin $/bbl Other Our Global Refining Cost Curve The US is at the bottom left Throughput Cost Curve 2017 Throughput Cost Curve ,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90, ,000 Cumulative Throughput Source: Credit Suisse Research, Bloomberg, EIA, OGJ 69

70 Disclosures