The Flowing Oil Chartbook January 13, 2016

Transcription

1 The Flowing Oil Chartbook January 13, 2016 RESEARCH ANALYSTS Jan Stuart Research Analyst Johannes Van Der Tuin Jonathan Aronson Research Analyst 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 companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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

3 Headlines What s Moving Oil The Commodity That Fell To Earth Crude markets flirt with sub - $30 pricing: Oil prices continued to crash over the last week, flirting with sub - $30/bbl prices repeatedly. Besides the psychological barrier of $30/bbl, there doesn t seem to be much of a technical floor under crude (pg. 5). Nor is there much of a catalyst to drive oil prices higher - Although, as is typically the case, markets are likely to become oversold at some point, catching some traders short and leading to a relief rally. The difficulty will be determining the difference between a dead-cat-bounce and true support. Investor macro concerns have become super-bearish, but might be overdone: All of this comes within the context of greater investor macroeconomic worries, about China and elsewhere. In fact, investor sentiment appears to be in panic mode according to the Credit Suisse Global Risk Appetite Index created by our economists (pg. 5), which is a measure of risk adjusted returns across a wide spectrum of global assets (panic is defined as being ~3 standard deviations below the mean). Historically, this is often a point at which we would expect some mean reversion, but much will depend on the next series of key macro data (particularly the ISM new orders). To that end, we are now including a US leading economic indicators monitor to help track recession risk (pg. 27). US product inventory builds depressed markets further today: Macroeconomics aside, markets were under pressure due to the weekly EIA data, specifically product inventory builds. As of last Friday, gasoline stocks rose by ~8.4 mbs and distillate stocks by 6.1 mbs, well above the expectations of 2.1 mbs and 1.1 mbs respectively (pg. 16). At first glance it might appear that demand (one of the saving graces of oil markets) finally hit a wall. But look closer and there is a more nuanced story. Yes, product builds have been substantial over the last couple of weeks, but the lion s share were focused on PADD II, which experienced dramatic flooding along the Mississippi and other river systems during the same period (inhibiting barge traffic) (pg. 5). Given this possible noise, we would hold our breath a couple more weeks before making any call on demand. Though we d point out that on the distillate side, the underlying fuels market has been weak, exacerbated by a very warm early-winter on the US East Coast. Bearishness weighed more on Brent than WTI, forcing an inversion: In fact, in crude markets bearish sentiments are weighing more on Brent than on WTI. As we approach the expiry of the February Brent contract, WTI Brent has inverted, and the futures remain so all the way out to mid-2017 (pg. 5). In the short-term, the move today may have been aided by a decision to postpone significant maintenance at both the Beaumont and Whiting refineries, but the inversion of the whole futures strip is more likely a reflection of light/sweet dynamics in the US and Atlantic Basin. Light/Heavy spreads remain wide, and inland Canadian barrels remain depressed: North American heavy crudes remain depressed both in terms of quality and basis differentials (pg. 42 and 52). With robust heavy/sour Canadian imports still coming down the pipe (pg. 56), it appears that any inversion of crude dynamics in the US is so far just impacting the light/sweet market. 3

4 Headlines What s Moving Refining Margins & Spreads Focusing in on US dynamics Refining Margins: Weekly average PADD 3 (LLS) margins were lower by.25/bbl last week to $9.69/bbl. Average PADD 5 (ANS) cracks were down by $8.16/bbl to $30.04/bbl. Average PADD 1 (Brent) margins widened to $9.94/bbl (up 1% or.1/bbl) and PADD 2 (WTI) cracks decreased by $2.08/bbl to $10.37/bbl. PADD 4 (WTI) cracks grew by.73/bbl to $21.63/bbl. Mid-Con Crude Spreads: The WTI-LLS widened this past week to -$-1.55/bbl. A) Northern Mid-Con Diffs: LLS WCS diffs were up $1.11/bbl to $15.64/bbl, while Syncrude averaged a discount of $1.73/bbl vs LLS (as compared to a.82/bbl discount last week). LLS Bakken differentials widened to $3.56/bbl. B) Midland Diffs: The LLS Midland WTI spread averaged $1.39/bbl (up.17/bbl) while the average LLS-WTS spread widened by.11/bbl to $1.44/bbl. Gulf and West Coast Crude Spreads: The weekly Brent LLS narrowed, averaging -$2.32/bbl. LLS MARS narrowed, averaging $4.87/bbl. The average LLS MAYA spread was around $10.02/bbl. The weekly average ANS KERN spread narrowed by $1.03/bbl from the previous week to $8.07/bbl. Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Platts 4

5 Headlines Key Charts to Watch The week s outstanding new data Brent price technicals (lhs), trading volume & OI (rhs) Global risk appetite (index; daily through 1/11/2016) 100 OI (futures) Volume (futures) Brent Price 63 day mav 200 day mav Euphoria Panic -6 0 S-14 D-14 M-15 J-15 S-15 D Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 PADD II total gasoline inventories (Mbs) 60 5 year average WTI Brent futures curves ($/b) 1/13/2015 $2 12/14/2015 1/5/2016 1/13/2016 $- $(2) $(4) 40 $(6) Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, EIA, ICE, Credit Suisse Economics Team 5

6 The Big Picture

7 The Big Picture Brent Structure Brent and WTI flat price with shaded area for Bollinger Bands ($/b) $140 Brent Price Brent 200 mav WTI Price WTI 200 mav $118 $96 $74 $52 $30 J-11 J-12 J-13 J-14 J-15 J-16 Brent futures curves ($/b) $70 $60 $50 $40 $30 1/8/ /8/ /31/2015 1/8/ Brent structure differentials (1-6) ($/b) $ $6 Backwardation: Bullish $4 $2 -$2 -$4 -$6 Contango: Bearish -$8 Brent physical vs. spot futures ($/b) $ $1 -$1 -$2 -$3 Jan Mar May Jul Sep Nov Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 7

8 The Big Picture WTI-Brent & Product Futures Curves WTI Brent futures curves ($/b) WTI futures curves ($/b) 1/8/ /8/ /31/2015 1/8/2016 $2 $70 1/8/ /8/ /31/2015 1/8/2016 $- $60 $(2) $(4) $(6) $50 $40 $(8) $ ICE Gasoil futures curves ($/MT) 1/8/ /8/2015 $750 12/31/2015 1/8/2016 $650 $550 $450 $350 RBOB futures curves ($/gal) $1.90 $ /8/ /8/ /31/2015 1/8/2016 $ Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 8

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

10 The Big Picture US Refinery Runs US crude runs (Mb/d) 18 5 year average US crude inventories (Mbs) 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 2015/2016 frcst 2015 actuals % 0 Source: Credit Suisse Research, EIA 10

11 The Big Picture PADDs I-IV PADD I IV East of Rockies crude runs (Mb/d) 15 5 year average PADD I IV East of Rockies crude inventories (Mbs) year average PADDs I IV East of Rockies utilization (% of total refinery operable capacity) PADD I IV East of Rockies CDU maintenance frcst (kb/d of capacity offline) 100% 4 year average yr ave 2015/2016 frcst 2015 actuals 95% % % % 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) 10 5 year average exit rate 2016 PADD I IV East of Rockies domestic crude production, monthly data (Mb/d) 9 5 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 1/8/2016 I II III IV V US Total Standard EIA stock number 16, , ,567 22,844 55, ,560 Crude storage capacity utilization (thousands of barrels) 1/8/2016 I II PADDs III IV V US Total Standard EIA stock number 75% 90% 70% 109% 76% 77% "Head Room" PADD I - IV East of Rockies 124,367 "Head Total shell Total Room" till capacity operable Total working Three week (incl. idle shell working Current capacity is average # of weeks 1/8/2016 capacity) capacity capacity * inventories full build till full PADD I - IV "East of Rockies" (excluding SPR): 557, , , , , 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.33/bbl,.08/bbl above Credit Suisse's 4Q15 forecast of.25/bbl - LLS - MAYA (Light - Heavy) QTD crude differentials are averaging $9.23/bbl, $2.23/bbl above Credit Suisse's 4Q15 forecast of $7.00/bbl - Rockies (WTI based) QTD refining margins are averaging $23.38/bbl, $2.12/bbl below Credit Suisse's 4Q15 forecast of $25.50/bbl - ANS - KERN QTD crude differentials are averaging $11.10/bbl, $1.86/bbl below Credit Suisse's 4Q15 forecast of $12.96/bbl - LLS - WCS QTD crude differentials are averaging $15.68/bbl, $3.22/bbl below Credit Suisse's 4Q15 forecast of $18.90/bbl - West Coast (ANS based) QTD refining margins are averaging $21.61/bbl, $6.61/bbl above Credit Suisse's 4Q15 forecast of $15.00/bbl - US Gulf Coast (LLS based) QTD refining margins are averaging $9.28/bbl, $1.22/bbl below Credit Suisse's 4Q15 forecast of $10.50/bbl - Asia (Dubai based) QTD refining margins are averaging $11.48/bbl,.88/bbl above Credit Suisse's 4Q15 forecast of $10.60/bbl - Northeast (Brent based) QTD refining margins are averaging $8.82/bbl, $1.18/bbl below Credit Suisse's 4Q15 forecast of $10.00/bbl - Mid - Continent (WTI based) QTD refining margins are averaging $14.20/bbl, $5.30/bbl below Credit Suisse's 4Q15 forecast of $19.50/bbl - LLS - MARS (Medium - Sour) QTD crude differentials are averaging $4.73/bbl,.23/bbl above Credit Suisse's 4Q15 forecast of $4.50/bbl Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Platts 17

18 The International Scene

19 The International Scene Crude Spreads WTI Brent spread ($/b) $ $5 -$10 -$15 -$20 Brent Dubai ($/b) $ $6 $4 $2 -$2 -$4 -$6 Brent Urals ($/b) $ $4 $3 $3 $2 $2 $1 $1 Arab Light MARS ($/b) $60 $ $50 $4 $3 $40 $2 $30 $1 $20 $10 -$1 -$2 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 19

20 The International Scene Cracks (incl. PADD I & III) US East Coast ($/b) (Brent based) NW Europe ($/b) (Brent based) $ $ $14 $15 $12 $10 $10 $8 $6 $5 $4 $2 SING ($/b) (Dubai Fateh based) $16 $14 $12 $10 $ US Gulf Coast ($/b) (LLS based)) $30 $25 $20 $15 $10 $ $6 -$5 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 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, the BLOOMBERG PROFESSIONAL service 21

22 The International Scene Refinery Runs OECD crude runs according to the IEA (Mb/d) 40 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) 82 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) 5 Yr Average ,300 5yr avg ,200 1, , D 900 D OECD gasoline inventories (Mbs) yr avg OECD middle distillate inventories (Mbs) yr 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) D Chinese gasoline net imports(+)/exports( ) (kb/d) D Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, NBS 25

26 Oil Macro

27 Key Leading Economic Indicators for the United States US gasoline share of disposable income (%; monthly through December) US household debt (trillion $; quarterly through 2015 Q3) 4.4% 3.9% 3.4% 2.9% 2.4% 1.9% Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan US personal savings ratio (%; monthly through November) Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Rising pay rolls in US (thousands of jobs; monthly through December) Dec 210K MoM, thous MAV 220K thru Nov 3 MAV 218K thru Nov -900 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Source: Credit Suisse Research, Federal Reserve, BLS, Credit Suisse Economics Team 27

28 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 (rhs) and yoy (lhs) 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 (rhs) and yoy (lhs) 3 mma % change 3% 2% 3 mma mom % change 3 mma yoy % change 1% 0% -1% -2% -3% F-11 F-12 F-13 F-14 F % 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% Source: Credit Suisse Research, IEA, EIA, JODI, Country Data 28

29 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 (rhs) and yoy (lhs) 3 mma % change 3 mma mom % change 3 mma yoy % change 3.0% 6% 2.5% 2.0% 4% 1.5% 1.0% 2% 0.5% 0.0% 0% -0.5% J-11 J-12 J-13 J-14 J-15 EM Asia ex-china (SA, 3mma of monthly data on a LN scale) 9.5 EM Asia ex-china oil demand data, mom (rhs) and yoy (lhs) 3 mma % change 3 mma mom % change 3 mma yoy % change 7% 3.5% J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 5% 3% 1% -1% -3% J-11 J-12 J-13 J-14 J % 1.5% 0.5% -0.5% -1.5% Source: Credit Suisse Research, IEA, JODI, Country Data 29

30 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 A-15 US oil demand growth by product (annual averages in kb/d, yoy) / / / E/ E/15E Others*** LPGs** Fuel oil Jet fuel Diesel* Gasoline Source: Credit Suisse Research, IEA, EIA 30

31 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 6% 3 mma mom % change 3 mma yoy % change 4% 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-10Jul-10Jan-11Jul-11Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Jul-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 Nov* 2015 ytd Nov* Nov* 2015 ytd Gasoline 2,183 2,413 2,483 2,692 2, % 11.6% Kerosene % 18.8% Diesel 3,377 3,387 3,617 3,420 3, % 1.0% MD 3,831 3,883 4,091 4,010 4, % 3.3% Fuel oil % -14.2% LPG , % 16.0% Naphtha 1,064 1,097 1,135 1,154 1, % 5.2% "Drive" 6,014 6,296 6,574 6,702 6, % 6.4% "Burn" 2,533 2,573 2,600 2,679 2, % 4.1% Total 8,547 8,869 9,174 9,380 9, % 5.8% * three month rolling average. "Drive" = gasoline + diesel + kerosene Source: Credit Suisse Research, IEA, JODI, NBS 31

32 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 1Q15 2Q15 3Q15 4Q15E 1Q16E 2Q16E 3Q16E 4Q16E E 2016E E 2015E 2016E Global 92, % 0.7% 1.0% 1.4% 1.8% 2.0% 2.1% 1.4% 1.5% 1.9% 1.7% 1.7% 1.6% 1.1% 1.8% 1.7% 1.2% OECD 45, % -1.7% -0.9% -0.3% 1.6% 1.2% 1.8% 0.4% 0.3% 1.1% 0.5% 0.8% 0.2% -0.7% 1.2% 0.7% -0.7% Emerging Markets 46, % 3.2% 3.0% 3.2% 2.0% 2.8% 2.4% 2.3% 2.6% 2.7% 2.9% 2.6% 3.0% 3.0% 2.4% 2.7% 3.4% OECD Americas 24, % -0.6% 0.2% 1.0% 1.5% 1.6% 1.5% 0.1% 0.6% 1.2% 0.8% 1.1% 1.9% 0.3% 1.2% 0.9% -0.1% Canada 2, % -1.6% 2.3% 1.7% -2.0% -2.5% -2.6% -3.3% -2.1% 0.4% 0.4% -1.0% -1.2% 0.9% -2.6% -0.6% 0.7% Mexico 2, % -5.3% -3.8% -2.1% -4.2% -3.4% 2.2% 0.7% 1.8% 1.7% 1.4% 1.4% -0.5% -4.0% -1.2% 1.6% -0.9% USA 19, % 0.3% 0.5% 1.3% 2.5% 2.6% 1.9% 0.5% 0.9% 1.2% 0.8% 1.3% 2.5% 0.8% 1.9% 1.1% -0.1% South America 6, % 1.8% 2.6% 2.4% 0.3% -0.6% -3.1% -2.2% -0.1% 0.2% 0.9% 0.3% 4.1% 2.6% -1.4% 0.3% 3.6% Brazil 3, % 4.6% 4.3% 4.6% 0.4% -2.6% -5.8% -5.6% -2.6% -2.2% -0.6% -1.9% 4.8% 4.7% -3.5% -1.8% 4.4% Argentina % -8.5% -2.1% -1.4% 2.8% 12.8% 3.6% 2.0% 3.0% 3.0% 3.0% 3.0% 3.0% -2.7% 5.1% 3.0% 2.5% Europe 14, % -3.1% -0.8% -0.6% 3.6% 1.4% 2.7% 1.2% 0.6% 1.2% 0.2% 0.7% -1.8% -1.3% 2.2% 0.7% -2.2% France 1, % -5.8% -1.3% -1.6% 2.6% -0.1% 0.1% -1.5% 1.4% -0.9% -4.6% -1.4% -1.5% -3.5% 0.3% -1.4% -2.4% Germany 2, % -7.6% 0.6% -0.3% 1.5% -2.0% -0.4% 0.6% -1.0% 3.8% 0.3% 1.0% 1.9% -1.6% -0.1% 1.0% -0.7% Italy 1, % -2.0% -3.1% -2.7% 2.2% 7.6% 7.9% 1.4% 0.7% 0.7% 0.7% 0.9% -8.1% -2.8% 4.8% 0.7% -5.6% UK 1, % -2.4% -0.9% 2.8% 3.2% 1.8% 3.3% 0.6% 0.4% 0.2% 0.2% 0.3% -1.6% 0.2% 2.2% 0.3% -1.8% Oth Europe 7, % -1.3% -0.7% -0.9% 4.8% 1.8% 3.2% 2.1% 1.0% 1.1% 1.1% 1.1% -1.9% -0.8% 2.9% 1.1% -2.1% FSU 4, % 3.1% 1.4% 3.2% -5.3% -5.7% -2.9% -2.0% 0.0% 1.0% 2.0% 1.0% 2.2% 4.0% -3.9% 1.0% 4.1% Mideast 8, % 4.2% 2.2% 4.7% 0.2% 3.9% 2.9% 4.6% 2.5% 2.4% 2.4% 2.5% 2.6% 3.6% 2.9% 2.4% 3.7% Saudi Arabia 3, % 13.3% 8.8% 9.1% 3.8% 5.8% 4.0% 8.0% 2.1% 2.0% 2.0% 2.0% 2.3% 9.4% 5.4% 2.0% 5.4% Iran 2, % -6.7% -4.7% 5.5% -6.9% -0.4% -1.5% -0.3% 3.0% 3.0% 3.0% 3.0% 4.4% -2.0% -2.3% 3.0% 2.5% Iraq % 5.7% -5.7% 4.4% -1.2% 3.4% 4.2% -2.0% 1.1% 1.0% 1.0% 2.0% 7.2% 2.6% 1.1% 1.3% 13.2% Africa 3, % 3.5% 7.4% 2.6% 4.8% 3.0% 3.0% 4.0% 3.8% 4.2% 4.6% 4.5% 4.6% 3.4% 3.7% 4.3% 2.5% Egypt % 5.9% 12.6% 1.8% 3.9% -2.3% 0.1% 3.9% 2.2% 2.0% 2.0% 2.0% 1.8% 5.9% 1.5% 2.1% 2.2% Asia-Pac 30, % 1.7% 1.0% 1.2% 2.6% 3.7% 4.0% 2.7% 2.5% 2.9% 2.7% 2.4% 1.7% 1.2% 3.2% 2.6% 2.5% China 10, % 2.0% 3.8% 5.6% 6.2% 6.3% 4.8% 2.3% 4.0% 3.9% 4.1% 4.0% 2.2% 2.5% 4.9% 4.0% 3.4% India 3, % 3.8% 4.3% 3.3% 5.1% 7.1% 9.4% 9.9% 5.6% 5.5% 4.6% 2.8% 1.1% 3.2% 7.9% 4.6% 3.8% Indonesia 1, % 13.1% -1.4% -6.6% -0.7% -0.8% 2.9% 0.7% 1.4% 1.5% 1.5% 1.5% 4.0% 3.8% 0.5% 1.5% 2.5% Japan 4, % -4.7% -8.8% -5.9% -5.6% -1.0% 0.3% -4.7% -3.1% -1.0% -1.6% -1.2% -3.0% -4.5% -3.0% -1.8% -0.4% South Korea 2, % 0.5% 1.9% -0.9% 5.5% 0.4% 2.7% 9.4% 3.1% 3.2% 3.6% 2.7% 0.3% 0.5% 4.5% 3.1% 0.8% Australia 1, % -0.1% 0.0% 0.0% 2.0% -1.1% 0.6% 1.0% 1.0% 1.0% 1.0% 1.0% 0.5% -0.1% 0.6% 1.0% 1.6% Thailand 1, % 2.8% 0.9% -0.9% -0.1% 0.0% 1.9% 1.9% 3.0% 3.0% 3.0% 3.0% 2.7% 0.8% 0.9% 3.0% 3.8% Source: Credit Suisse Research, IEA, EIA, JODI 32

33 Oil Macro Global Supply Table Oil Supply in kbd Q15 2Q15 3Q15E 4Q15E 2015E 1Q16 2Q16E 3Q16E 4Q16E 2016E 2017E 1Q15 2Q15 3Q15E 4Q15E 1Q16 2Q16E 3Q16E 4Q16E E 2016E 2017E Global Oil 93,340 95,150 95,870 95,870 95,890 95,700 95,180 95,570 95,580 96,370 95,680 96,980 2,640 3,000 2,600 1, ,035 2, ,300 Opec all oil 36,990 37,230 38,210 38,270 37,980 37,920 38,070 38,630 38,650 38,600 38,490 39, ,370 1, Non Opec 54,240 55,840 55,390 55,460 55,810 55,630 54,990 54,640 54,760 55,640 55,010 55,430 2,360 1,600 1, ,140 1, Non Opec EX us 41,440 42,200 41,500 41,590 41,990 41,820 41,780 41,370 41,200 41,710 41,520 41, North America 20,390 21,350 21,040 21,380 21,390 21,290 20,790 20,510 20,940 21,290 20,880 21,670 1, , US 12,790 13,640 13,890 13,870 13,820 13,810 13,210 13,260 13,560 13,930 13,490 14,350 1,760 1, ,720 1, Canada 4,280 4,560 4,040 4,380 4,490 4,370 4,580 4,280 4,400 4,420 4,420 4, Mexico 2,790 2,620 2,540 2,590 2,550 2,580 2,470 2,400 2,440 2,400 2,430 2, South America 8,350 8,580 8,460 8,450 8,460 8,480 8,430 8,450 8,390 8,450 8,430 8, Venezuela 2,720 2,720 2,680 2,640 2,640 2,670 2,640 2,590 2,560 2,560 2,590 2, Brazil 2,820 3,020 2,960 3,080 3,070 3,030 3,060 3,120 3,130 3,200 3,130 3, Argentina Columbia 990 1,030 1, , Europe 4,230 4,350 4,460 4,320 4,440 4,390 4,220 4,200 4,080 4,330 4,210 3, Norw ay 1,870 1,940 1,920 1,910 1,970 1,930 1,880 1,770 1,740 1,880 1,820 1, United Kingdom FSU 14,060 14,280 14,240 14,070 14,310 14,230 14,390 14,350 14,140 14,430 14,330 14, Russia 10,790 10,950 10,970 10,890 11,050 10,960 11,080 11,110 11,020 11,190 11,100 11, Kazakhstan 1,760 1,800 1,750 1,680 1,770 1,750 1,790 1,730 1,660 1,760 1,740 1, Azerbaijan Middle East 29,010 29,300 30,310 30,410 30,010 30,010 30,250 30,840 30,940 30,880 30,730 31, ,210 1,510 1, , Saudi Arabia 11,790 11,860 12,320 12,140 11,920 12,060 12,150 12,170 12,170 12,170 12,170 12, Iran 3,600 3,510 3,680 3,550 3,410 3,540 3,650 4,150 4,150 4,150 4,030 4, UAE 3,710 3,740 3,800 3,850 3,840 3,810 3,750 3,860 3,920 3,920 3,860 3, Kuw ait 3,120 3,210 3,060 3,120 3,020 3,100 3,080 3,030 3,080 3,030 3,050 3, Iraq 3,310 3,500 4,030 4,360 4,390 4,070 4,200 4,200 4,200 4,200 4,200 4, , Qatar 2,110 2,120 2,110 2,090 2,170 2,120 2,110 2,100 2,100 2,100 2,100 2, Africa 8,420 8,360 8,320 8,290 8,340 8,330 8,240 8,260 8,210 8,210 8,230 8, Nigeria 2,370 2,350 2,300 2,310 2,410 2,340 2,300 2,300 2,300 2,300 2,300 2, Algeria 1,520 1,500 1,470 1,450 1,430 1,460 1,420 1,410 1,390 1,380 1,400 1, Libya Angola 1,710 1,810 1,830 1,860 1,850 1,840 1,840 1,870 1,840 1,840 1,850 1, Sudan Asia 8,880 8,930 9,040 8,950 8,940 8,960 8,860 8,950 8,880 8,790 8,870 8, Indonesia China 4,220 4,250 4,340 4,310 4,320 4,310 4,270 4,290 4,300 4,270 4,280 4, India Source: Credit Suisse Research, IEA, EIA, JODI, Petrologistics 33

34 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: = 1.73% 6,000 38, Sep. '15 = 11.22% 73 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 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: = 0.71% Sep. '15 = 0.37% 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 34

35 Oil Macro Regional Rig Counts & Production Latin America production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) 8100 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 F-11 F-12 F-13 F-14 F-15 Middle East production (crude + NGLs) kb/d (lhs), aggregate rig count (rhs) Rigs Production F-11 F-12 F-13 F-14 F-15 Source: Credit Suisse Research, IEA, EIA, JODI, Petrologistics, Baker Hughes, Country Data 35

36 Oil Macro Declining Production Tracker OPEC and Non-OPEC seasonally adjusted decline tracker (mom rhs, yoy lhs) 3% 3 mma mom % change 3 mma yoy % change 1.0% 0.5% 1% 0.0% -1% -0.5% -3% -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 % change 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 % change -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 36

37 Saudi Arabia Productivity and Price Tracker Keeping an eye on the rig count and OSPs vs. benchmarks Saudi Arabia rig count (rhs) and total liquids production (kb/d; lhs) 13,000 12,000 Series1 Production forecast 2016 avg 11,000 10,000 9,000 Jun-12 Jun-13 Jun-14 Jun Saudi OSP US ASCI ($/b) 4 Saudi OSP US J-10 J-11 J-12 J-13 J-14 J-15 J-16 Saudi OSP Asia Oman/Dubai ($/b) Saudi OSP NWE Weighted Average Brent ($/b) 6 Saudi OSP Asia 2 Saudi OSP NWE J-10 J-11 J-12 J-13 J-14 J-15 J-16-8 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Baker Hughes, Petrologistics 37

38 Oil Macro Global Balances (Demand) Demand 2012 Q1-'13 Q2-'13 Q3-'13 Q4-' Q1-'14 Q2-'14 Q3-'14 Q4-' Q1-'15 Q2-'15 Q3-'15E Q4-'15E 2015E Q1-'16E Q2-'16E Q3-'16E Q4-'16E 2016E 2017E Global YoY Growth, net mb/d YoY Growth, % 0.9% 1.9% 1.9% 1.6% 0.9% 1.6% 1.2% 0.7% 1.0% 1.4% 1.1% 1.8% 2.0% 2.1% 1.4% 1.8% 1.5% 1.9% 1.7% 1.7% 1.7% 1.6% OECD YoY Growth, net mb/d YoY Growth, % -1.3% -1.1% 0.3% 0.9% 0.5% 0.2% 0.0% -1.7% -0.9% -0.3% -0.7% 1.6% 1.2% 1.8% 0.4% 1.2% 0.3% 1.1% 0.5% 0.8% 0.7% 0.0% Americas YoY Growth, net mb/d YoY Growth, % -1.8% 1.7% 1.2% 2.4% 2.2% 1.9% 0.4% -0.6% 0.2% 1.0% 0.3% 1.5% 1.6% 1.5% 0.1% 1.2% 0.6% 1.2% 0.8% 1.1% 0.9% 0.7% Europe YoY Growth, net mb/d YoY Growth, % -2.9% -4.7% -0.4% 0.0% -1.6% -1.7% -1.1% -3.3% -1.0% -0.7% -1.5% 3.6% 1.4% 2.6% 1.1% 2.2% 0.5% 1.0% 0.0% 0.5% 0.5% -0.6% Asia Pacific YoY Growth, net mb/d YoY Growth, % 3.0% -2.6% -0.9% -1.7% -0.6% -1.5% 0.6% -2.4% -4.3% -3.5% -2.4% -1.4% -0.5% 1.1% 0.3% -0.2% -0.7% 0.7% 0.4% 0.4% 0.2% -0.9% Non-OECD YoY Growth, net mb/d YoY Growth, % 3.3% 5.1% 3.5% 2.2% 1.3% 3.0% 2.5% 3.2% 3.0% 3.2% 3.0% 2.0% 2.8% 2.4% 2.3% 2.4% 2.6% 2.7% 2.9% 2.6% 2.7% 3.1% Former Soviet Union YoY Growth, net mb/d YoY Growth, % 2.3% -0.6% 0.7% 3.8% 4.4% 2.2% 8.7% 3.1% 1.4% 3.2% 4.0% -5.3% -5.7% -2.9% -2.0% -3.9% 0.0% 1.0% 2.0% 1.0% 1.0% 0.3% China YoY Growth, net mb/d YoY Growth, % 4.1% 5.8% 4.1% 1.9% -2.4% 2.2% -1.6% 2.0% 3.8% 5.6% 2.5% 6.2% 6.3% 4.8% 2.3% 4.9% 4.0% 3.9% 4.1% 4.0% 4.0% 3.9% Other emerging Asia YoY Growth, net mb/d YoY Growth, % 2.7% 5.1% 3.1% 3.0% 3.0% 3.6% 3.3% 4.3% 2.2% 0.6% 2.6% 2.5% 4.0% 5.1% 4.6% 4.0% 3.3% 3.3% 2.9% 2.4% 3.0% 3.1% South America YoY Growth, net mb/d YoY Growth, % 4.3% 3.9% 3.9% 4.6% 3.7% 4.1% 3.5% 1.8% 2.6% 2.4% 2.6% 0.3% -0.6% -3.1% -2.2% -1.4% -0.1% 0.2% 0.9% 0.3% 0.3% 2.0% Mideast YoY Growth, net mb/d YoY Growth, % 3.5% 7.3% 3.3% 0.9% -0.5% 2.6% 3.5% 4.2% 2.2% 4.7% 3.6% 0.2% 3.9% 2.9% 4.6% 2.9% 2.5% 2.4% 2.4% 2.5% 2.4% 2.4% Africa YoY Growth, net mb/d YoY Growth, % 2.7% 10.0% 8.3% -2.4% 2.8% 4.6% 0.5% 3.5% 7.4% 2.6% 3.4% 4.8% 3.0% 3.0% 4.0% 3.7% 3.8% 4.2% 4.6% 4.5% 4.3% 4.3% Source: Credit Suisse Research, IEA, JODI, EIA, NBP, ANP 38

39 Oil Macro Global Balances (Supply) Supply 2012 Q1-'13 Q2-'13 Q3-'13 Q4-' Q1-'14 Q2-'14 Q3-'14 Q4-' Q1-'15 Q2-'15 Q3-'15E Q4-'15E 2015E Q1-'16E Q2-'16E Q3-'16E Q4-'16E 2016E 2017E Global YoY Growth, net mb/d (0.3) (0.3) 0.5 (0.0) 1.3 YoY Growth, % 2.8% 0.0% 1.0% 1.7% 1.1% 1.0% 1.9% 1.6% 2.0% 3.3% 2.2% 2.9% 3.2% 2.8% 1.2% 2.5% 0.0% -0.3% -0.3% 0.5% 0.0% 1.4% Non OPEC YoY Growth, net mb/d YoY Growth, % 1.6% 1.3% 2.8% 4.1% 3.3% 2.9% 3.6% 4.4% 4.0% 4.3% 4.1% 4.4% 3.0% 2.5% 0.4% 2.6% -1.5% -1.4% -1.3% -0.3% -1.1% 0.8% North America YoY Growth, net mb/d YoY Growth, % 7.6% 7.0% 8.0% 11.5% 8.5% 8.7% 9.1% 12.4% 10.2% 10.5% 10.6% 9.4% 4.1% 4.0% 1.0% 4.5% -2.7% -2.6% -2.1% -0.5% -2.0% 3.8% South America YoY Growth, net mb/d YoY Growth, % -0.9% -1.9% 2.7% 4.8% 3.5% 2.2% 3.4% 3.6% 6.4% 8.1% 5.4% 8.7% 5.7% 2.6% -0.7% 3.9% -1.1% 1.3% 0.1% 1.1% 0.4% -1.2% Europe YoY Growth, net mb/d YoY Growth, % -6.0% -9.1% -6.9% -0.2% 1.5% -3.9% 1.9% -1.3% -0.2% 2.8% 0.8% 0.4% 7.7% 6.6% 2.1% 4.1% -3.5% -6.5% -6.4% -3.0% -4.8% -5.2% FSU YoY Growth, net mb/d YoY Growth, % 0.4% 1.4% 1.9% 2.1% 1.8% 1.8% 0.5% -0.2% -0.3% -0.9% -0.2% 1.0% 1.5% 0.7% 1.5% 1.2% 0.7% 0.8% 0.5% 0.8% 0.7% 0.4% Russia YoY Growth, net mb/d YoY Growth, % 1.0% 1.3% 1.9% 1.4% 0.9% 1.4% 0.6% 0.2% -0.5% 0.0% 0.1% 1.1% 1.6% 1.8% 1.8% 1.6% 1.3% 1.3% 1.2% 1.2% 1.2% 0.8% Africa YoY Growth, net mb/d YoY Growth, % -5.3% -6.9% 1.4% 3.5% 6.9% 1.1% 7.0% 4.9% 2.7% -1.3% 3.2% 0.7% -1.3% -1.1% -3.2% -1.3% -2.6% -1.6% -0.9% 0.7% -1.1% 2.0% Mideast YoY Growth, net mb/d YoY Growth, % -13.0% -2.9% -11.3% -11.7% -11.4% -9.4% -4.0% 0.1% -2.0% -3.6% -2.4% -3.6% -6.4% -7.0% -7.3% -6.1% -4.9% 0.3% 0.6% 2.9% -0.3% 1.3% Asia YoY Growth, net mb/d YoY Growth, % 2.0% 0.3% 1.3% -2.7% -2.3% -0.9% -1.5% -1.4% -0.7% 0.7% -0.7% 0.5% 1.5% 2.4% -0.6% 0.9% -0.9% -1.2% -0.9% -1.8% -1.2% -2.4% Processing gain OPEC YoY Growth, net mb/d YoY Growth, % 4.5% -1.8% -1.3% -1.4% -2.1% -1.6% -0.3% -2.1% -0.6% 1.9% -0.3% 0.7% 3.7% 3.2% 2.4% 2.5% 2.3% 1.1% 1.0% 1.6% 1.5% 2.3% Opec Crude Oil YoY Growth, net mb/d YoY Growth, % 4.2% -3.5% -2.8% -2.9% -3.6% -3.2% -1.3% -3.4% -1.6% 1.2% -1.3% 1.0% 4.7% 4.2% 3.3% 3.3% 2.6% 1.1% 1.0% 1.6% 1.6% 2.2% Saudi Arabia YoY Growth, net mb/d YoY Growth, % 4.9% -7.6% -4.8% 3.3% 3.7% -1.4% 6.4% 1.4% -4.0% -2.7% 0.1% 0.2% 5.2% 3.3% 3.6% 3.1% 3.1% -1.4% 0.1% 2.0% 0.9% 0.0% Opec non-crude YoY Growth, net mb/d YoY Growth, % 5.9% 7.6% 7.3% 6.4% 5.7% 6.7% 4.8% 4.5% 4.4% 5.0% 4.7% -0.9% -0.7% -1.2% -1.7% -1.1% 0.8% 0.8% 0.9% 1.7% 1.1% 2.6% Source: Credit Suisse Research, IEA, Petrologistics, EIA, NBP, ANP 39

40 Oil Macro Global Balances (Inventories) Balance, stocks 2012 Q1-'13 Q2-'13 Q3-'13 Q4-' Q1-'14 Q2-'14 Q3-'14 Q4-' Q1-'15 Q2-'15 Q3-'15E Q4-'15E 2015E Q1-'16E Q2-'16E Q3-'16E Q4-'16E 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, % -1.1% 1.8% -0.5% -3.3% -3.9% -1.5% -3.4% -6.2% -4.6% -4.4% -4.7% -2.3% 0.8% 2.0% 3.8% 1.1% 7.4% 8.4% 7.3% 5.4% 10.9% 12.7% 'Call on Saudi & stocks" YoY Growth, net mb/d YoY Growth, % -11.0% 10.9% 3.0% 1.9% 2.0% 4.1% -0.5% -7.7% -12.6% -18.4% -10% -10.9% -7.7% -3.6% 5.3% -4.2% 20.7% 24.7% 21.1% 14.4% 20.0% 2.1% Source: Credit Suisse Research, IEA, JODI, EIA, NBP, ANP 40

41 US Gulf Coast (USGC)

42 USGC Crude Spreads Brent LLS ($/b) $ $8 $6 $4 $2 -$2 -$4 -$6 LLS Houston ($/b) $8 $6 $4 $2 -$2 J-13 O-13 J-14 A-14 J-14 O-14 J-15 A-15 J-15 O-15 Houston WTI ($/b) LLS MARS ($/b) $15 $10 $5 Houston WTI ($/b) -$5 J-13 O-13 J-14 A-14 J-14 O-14 J-15 A-15 J-15 O-15 $8 $7 $6 $5 $4 $3 $2 $ Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 42

43 USGC Crude Spreads (cont d) LLS MAYA ($/b) RFO LLS ($/b) $ $20 -$ $15 -$10 $10 -$15 $5 -$20 -$25 Brent ASCI ($/b) $ $14 $12 $10 $8 $6 $4 $2 Arab Light MARS ($/b) $ $4 $3 $2 $1 -$1 -$2 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 43

44 USGC Crack Spreads and Refining Margins US Gulf Coast gasoline cracks ($/b) (LLS based) $40 $30 $20 $ US Gulf Coast distillate cracks ($/b) (LLS based) $25 $20 $15 $10 $ $10 US Gulf Coast gasoline cracks ($/b) (WTI based) $ $30 $20 $10 -$10 US Gulf Coast distillate cracks ($/b) (WTI based) $35 $30 $25 $20 $15 $10 $ Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 44

45 USGC Crack Spreads and Refining Margins (cont d) US Gulf Coast ($/b) (WTI based) $ $30 $25 $20 $15 $10 $5 US Gulf Coast ($/b) (MAYA based) $35 $30 $25 $20 $15 $10 $ US Gulf Coast ($/b) (LLS based)) $ $25 $20 $15 $10 $5 -$5 VGO cracks vs LLS Gulf Coast crack ($/b) $30 VGO crack LLS crack $20 $10 -$10 -$20 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 45

46 USGC PADD III Refinery Runs PADD III crude runs (Mb/d) year average PADD III crude inventories (Mbs) year average PADD III utilization (% of total refinery operable capacity) 100% 4 year average % 80% 70% PADD III CDU maintenance forecast (kb/d of capacity offline) yr ave 2015/2016 frcst 2015 actuals Source: Credit Suisse Research, EIA 46

47 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 47

48 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 October-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 50,628 Texas Inland 2,033 Texas Gulf Coast 28,025 La. Gulf Coast 18,790 N. La., Ark 1,436 New Mexico 344 Tank farms (excluding SPR) 249, , , ,087 1/8/2016 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, , , , ,361-2,207 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 48

49 Permian

50 Permian Crude Spreads WTI (Cushing) WTI (Midland) ($/b) $ $20 $15 $10 $5 -$5 WTI (Cushing) WTS (Midland) ($/b) $20 $15 $10 $5 -$ 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, the BLOOMBERG PROFESSIONAL service, EIA, Baker Hughes 50

51 Permian Pipeline Map Permian pipeline map Source: Pioneer Natural Resources 51

52 Mid - Continent

53 Mid Continent Crude Spreads WTI LLS ($/b) $ $2 -$4 -$6 -$8 -$10 -$12 -$14 WCS Canadian Heavy LLS ($/b) -$5 -$10 -$15 -$20 -$25 -$30 -$ Syncrude LLS ($/b) $ $2 -$2 -$4 -$6 -$8 -$10 -$12 Bakken (Clearbrook) LLS ($/b) -$2 -$4 -$6 -$8 -$10 -$12 -$14 -$ Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 53

54 Mid Continent Crack Spreads and Product Differentials US Mid-Continent Cushing ($/b) (WTI based) US Rockies ($/b) (WTI based) $ $ $50 $50 $40 $40 $30 $30 $20 $20 $10 $10 Mid-Con USGC gasoline price ($/b) $40 $30 $20 $10 -$10 -$ Mid-Con USGC distillate price ($/b) $30 $25 $20 $15 $10 $5 -$5 -$ Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 54

55 Mid Continent PADD II Refinery Runs PADD II crude runs (Mb/d) 4 5 year average PADD II crude inventories (Mbs) 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 2015/2016 frcst 2015 actuals % 0 Source: Credit Suisse Research, EIA 55

56 Mid Continent PADD IV Refinery Runs PADD IV crude runs (Mb/d) year average PADD IV inventories (Mbs) year average PADD IV utilization (% of total refinery operable capacity) 110% 4 year average % 90% 80% 70% PADD IV CDU maintenance forecast (kb/d of capacity offline) yr ave 2015/2016 frcst 2015 actuals Source: Credit Suisse Research, EIA 56

57 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 57

58 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 October-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 15,160 Tank farms (excluding SPR) 144, , , ,878 Cushing Ok 85,116 84,969 70,812 53,921 1/8/2016 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, , , ,159 17,440 1, Cushing Ok 85,116 84,969 70,812 64,007 6, (*) 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 58

59 West Coast

60 West Coast Crude & Crack Spreads ANS KERN ($/b) US West Coast ($/b) (ANS based) $ $ $20 $15 $60 $50 $40 $10 $5 $30 $20 $10 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service 60

61 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 2015/2016 frcst 2015 actuals % 0 Source: Credit Suisse Research, EIA 61

62 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 62

63 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-15 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 63

64 West Coast PADD V Storage Capacity and Detail October-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 24,866 Tank farms (excluding SPR) 34,929 33,660 27,899 25,290 1/8/2016 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 55,629 17, (*) 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 64

65 East Coast

66 East Coast Product Cracks & Gasoline Demand US East Coast ($/b) (Brent based) $20 $15 $10 $5 US East Coast gasoline cracks ($/b) (Brent based) $30 $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 3,200 $10 $5 3,000 2,800 D Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Platts, EIA 66

67 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 67

68 Technicals

69 Thousands Other Technical Indicators Brent futures Managed Money positions (thousands of contracts) 400 Long MM Positions WTI futures Managed Money positions (thousands of contracts) Shorts Long MM Positions Shorts 0 J-13 M-13 S-13 J-14 M-14 S-14 J-15 M-15 S-15 J-16 0 J-13 M-13 S-13 J-14 M-14 S-14 J-15 M-15 S-15 J-16 Net length for Managed Money positions over the past year Current Hi Low Average Brent MM WTI MM Total Crude MM (contracts) Open interest for all categories over the past year (thousands of contracts) Brent OI WTI OI Total Crude OI (contracts) Current Hi Low Average Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, CFTC, ICE 69

70 Other Technical Indicators - Continued Brent price technicals (lhs), trading volume & OI (rhs) WTI price technicals (lhs), trading volume & OI (rhs) OI (futures) Volume (futures) Brent Price 63 day mav 200 day mav 6000 OI (futures) Volume (futures) WTI Price 63 day mav 200 day mav S-14 D-14 M-15 J-15 S-15 D S-14 D-14 M-15 J-15 S-15 D-15 0 Brent March 2016 options positioning by strike price Calls Puts WTI February 2016 options positioning by strike price Calls Puts $19 -$7 $6 $19 $31 $44 $56 $69 $81 $94 $ $20 -$8 $5 $18 $30 $43 $55 $68 $80 $93 $105 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, CFTC, ICE 70

71 Other Technical Indicators - Continued Brent futures curve open interest ($/b) $70 $65 $60 $55 $50 $45 $40 $35 12/29/2015 1/5/2016 $30 J-15 J-16 A-16 M-17 S-17 A-18 O-18 M-19 D-19 WTI futures curve open interest ($/b) $70 $65 $60 $55 $50 $45 $40 $35 12/29/2015 1/5/2016 $30 D-14 J-15 J-16 A-16 M-17 S-17 A-18 O-18 M-19 D-19 J-20 J-21 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, CFTC, ICE 71

72 NGLs

73 NGL Prices & Fractionation Spreads Quarterly gross processing spread (ave. of weekly spreads) ($/gal.) Q14 2Q14 3Q14 4Q Q15 2Q15 3Q15 4Q15 Weekly gross processing spread ($/gal.) $1.60 Average Spread since 1992 =.32 $ J-92 O-94 J-97 A-00 J-03 O-05 J-08 A-11 J-14 Components of NGL fractionation spread ($/MMBtu) NGL barrel economics (%) Ethane Propane Butane Isobutane Natural Gasoline $14 Ethane Contr. 100% Propane Contr. Natural $10 Normal Butane Contr. 80% Gasoline, Isobutane Contr. 29% Isobutane, $6 Natural Gasoline Contr. 60% 13% Butane, 14% $2 -$2 Avg NGL Frac Spread Avg NGL Frac Spd $6 05: ~$1.59/MMBtu Current: ~$7.32/MMBtu J-00 O-01 J-03 A-05 J-07 O-08 J-10 A-12 J-14 O-15 40% 20% 0% Ethane, 12% NGL Barrel Economics Propane, 32% Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Platts 73

74 NGL Arb. & Chemicals Prices VLGC spot tanker day rates (thousands of $) F. East Chemicals Prices ($/MT) $150 $125 $100 $75 $50 $25 $ yr average $17.50 $15.00 $12.50 $10.00 F. East Polypropylene $7.50 F. East Linear Low Density Polyethylene 1/4/2013 1/4/2014 1/4/2015 USGC to Asia NGL arb. ($/gal.) $2.00 USGC to Europe NGL arb. ($/gal.) $2.00 $1.50 $1.50 $ $- US propane ($/gal.) Asia net-back ($/gal.) Hypothetical Asia net-back post PCE ($/gal.) J-11 J-12 J-13 J-14 J-15 $ $- US propane ($/gal.) Europe net-back ($/gal.) J-11 J-12 J-13 J-14 J-15 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Platts, Clarksons 74

75 Octane Monitor Aromatics and alky. should flag any imminent octane squeeze Butane RBOB ($/gal.) Alky FOB 87 unleaded waterborne gasoline ($/gal.) $1.00 J A J O $ $ Xylene LLS (RHS, $/gal.) vs. premium gasoline RBOB (LHS $/gal.) BTX aromatics ($/gal.) $2.50 $2.00 $1.50 $1.00 Xylenes - LLS Premium-RBOB spread $6.50 $5.50 $4.50 $3.50 Benzene Toluene Xylenes $ /4/2013 1/4/2014 1/4/ $1.50 1/4/2013 1/4/2014 1/4/2015 Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, Platts 75

76 Other

77 Other Wholesale & Retail Margins, LPGs & VMT Rack margins, spread vs. Gulf Coast price ($/gal) $1.00 Tampa Atlanta (Athens) Jacksonville Chicago (East Chicago) US LPG Margins WTI ($/b) $50 $25 $- $(25) $(50) $(75) Ethane Propane Normal Butane Isobutane Natural Gasoline -.50 M-13 J-13 S-13 D-13 M-14 J-14 S-14 D-14 M-15 J-15 S-15 D-15 $(100) J-11 J-12 J-13 J-14 J-15 Weekly US retail composite margins (c/gal) 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, the BLOOMBERG PROFESSIONAL service, EIA, DoT, U. Michigan TRI 77

78 Other Fuel Efficiency & Tanker Fixtures Apparent fuel efficiency (seasonally adjusted VMT/gasoline demand) Apparent fuel efficiency J-02 J-04 J-06 J-08 J-10 J-12 J-14 Average sales-weighted fuel-economy rating of new car sales Sales weighted MPG J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 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 J-15 Outgoing tanker fixtures from the Arabian Gulf Total fixtures out of AG (CS estmates) Source: Credit Suisse Research, the BLOOMBERG PROFESSIONAL service, EIA, DoT, U. Michigan TRI, MAREX, Clarksons 78

79 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, the BLOOMBERG PROFESSIONAL service, EIA, OGJ 79

80 Disclosures