WEEKLY REFINING INDICATORS REPORT WEEK ENDING 09/30/2016

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1 WEEKLY REFINING INDICATORS REPORT WEEK ENDING 09/30/2016 Blake Fernandez, Analyst Quick Take: Crude draw a function of lower imports (- 125MBbl/d), lower utilization (-1.8%), lower 48 production (-38MBbl/d) and a -910MBbl adjustment. Demand for gasoline remains robust (+3.2%) but distillate is in the gutter (-8.9%). Gasoline imports ramped up 225MBbl/d wk/wk, contributing to the build. Finally, product exports declined a bit, likely a function of Colonial disruptions being corrected. 37x 33x 29x 25x Days of Crude Demand Cover Trailing 4-week average crude throughput is 2.3% above the year-ago comp. We estimate September demand cover of 30.7 days (September 15 = 28.5 days, September avg. = 24.2). Trailing 4-week average gasoline demand is 3.2% above the year-ago comp. We estimate September demand cover of 24.3 days (September 15 = 24.3 days, September avg. = 24.0). Trailing 4-week average distillate demand is 8.9% below the year-ago comp. We estimate September demand cover of 45.4 days (September 15 = 39.2 days, September avg. = 36.6). 21x 5-yr Avg Days of Gasoline Demand Cover 29x 27x 25x 23x 21x 5-yr Avg Trailing 4-week average total product demand is 3.0% above the year-ago comp. We estimate September demand cover of 70.0 days (September 15 = 67.0 days, September avg. = 60.4). 52x 44x Days of Distillate Demand Cover 36x 28x 20x 5-yr Avg x Days of Total Product Demand Cover 66x 61x 56x 51x 5-yr Avg Information and sources for all charts and tables in this report were compiled from Scotia Howard Weil, EIA and Bloomberg. For all relevant disclosures and certifications see Appendix A Important Disclosures of this report. 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. Page 1 of 13 Scotia Howard Weil 1100 Poydras Street, Suite 3500 New Orleans, LA 70163

2 DOE Inventories & Imports (000s) Inventories TOTAL U.S. Current Year-ago % Change 5-Yr. Average % Change Crude 499, ,997 8% 376,469 33% Total Gasoline (includes RFG + blendstock) 227, ,920 2% 212,362 7% Total Distillate (Diesel + #2 Heating Oil) 160, ,150 8% 137,005 17% # 2 Heating Oil 12,327 14,550-15% 22,753-46% Diesel 148, ,600 10% 114,252 30% Imports Crude 7,710 7,068 9% 7,904-2% Total Gasoline (includes RFG + blendstock) 1, % % Total Distillate (Diesel + #2 Heating Oil) % 99 4% Crude Throughput 16,032 15,559 3% 15,329 5% Refinery Utilization 0.0% 87.5% -100% 88.4% -100% REGIONAL INVENTORY Current Year-ago % Change 5-Yr. Average % Change PADD 1 (Northeast) Crude 15,350 15,490-1% 11,834 30% Total Gasoline (includes RFG + blendstock) 59,797 63,237-5% 54,846 9% RBOB (Alcohol) 17,162 20,391-16% 15,957 Total Distillate (Diesel + #2 Heating Oil) 64,354 58,915 9% 49,051 31% # 2 Heating Oil 6,115 8,658-29% 15,618-61% Diesel 58,239 50,257 16% 33,432 74% PADD 2 (Midwest) Crude 147, ,177 12% 103,510 43% Total Gasoline (includes RFG + blendstock) 49,099 46,781 5% 48,491 1% RBOB (Alcohol) 6,102 5,621 9% 6,042 Total Distillate (Diesel + #2 Heating Oil) 34,031 31,260 9% 30,047 13% PADD 3 (Gulf Coast) Crude 260, ,580 8% 190,057 37% Total Gasoline (includes RFG + blendstock) 83,876 76,860 9% 74,256 13% RBOB (Alcohol) 11,352 10,957 4% 10,827 Total Distillate (Diesel + #2 Heating Oil) 43,098 42,614 1% 41,859 3% PADD 4 (Rockies) Crude 25,627 22,127 16% 19,315 33% Total Gasoline (includes RFG + blendstock) 6,846 7,152-4% 6,659 3% Total Distillate (Diesel + #2 Heating Oil) 3,670 3,488 5% 3,483 5% PADD 5 (West Coast) Crude 50,648 50,623 0% 52,292-3% Total Gasoline (includes RFG + blendstock) 27,788 29,890-7% 27,963-1% Total Distillate (Diesel + #2 Heating Oil) 15,565 12,873 21% 12,544 24% Page 2 of 13

3 Demand vs. Supply Charts 17,000 US Crude Demand (000 Bbl/d) 560,000 US Crude Stocks (000 Bbls) 16, ,000 15, ,000 14, ,000 13, ,000 9,850 U.S. Gasoline Demand (000 Bbl/d) 270,000 Gasoline Stocks (000 Bbls) 9, ,000 8, ,000 8, ,000 7, ,000 4,400 Distillate Demand (000 Bbl/d) 180,000 Distillate Stocks (000 Bbls) 4, ,000 3, ,000 3, ,000 3, ,000 Total Product Demand (000 Bbl/d) Total Product Stocks (000 Bbls) 21,100 1,415,000 20,200 1,305,000 19,300 1,195,000 18,400 1,085,000 17, ,000 Page 3 of 13

4 Regional Refinery Utilization US Total Refinery Utilization (%) PADD I Refinery Utilization (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr Avg '16 PADD II Refinery Utilization (%) PADD III Refinery Utilization (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr Avg '16 5-yr Avg '16 PADD IV Refinery Utilization (%) PADD V Refinery Utilization (%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5-yr Avg '16 5-yr Avg '16 Page 4 of 13

5 Regional Crack Spreads East Coast (Brent + Freight) 3Q15 $ Q15 $7.65 1Q16 $6.31 2Q16 $9.06 QTD 16 $8.85 $25.00 $20.00 $15.00 East Coast $10.00 $ Chicago (WTI) 3Q15 $ Q15 $ Q16 $ Q16 $15.99 QTD 16 $14.88 $50.00 $40.00 $30.00 Chicago $20.00 $ Gulf Coast (LLS) 3Q15 $ Q15 $9.28 1Q16 $9.22 2Q16 $11.21 QTD 16 $11.65 $24.00 $18.00 $12.00 Gulf Coast $ ($6.00) Page 5 of 13

6 Regional Crack Spreads West Coast (ANS cif W. Coast) 3Q15 $ Q15 $ Q16 $ Q16 $19.08 QTD 16 $16.93 $60.00 $48.00 $36.00 West Coast $24.00 $ NW Europe (Brent) 3Q15 $ Q15 $ Q16 $7.94 2Q16 $10.59 QTD 16 $9.43 $25.00 $20.00 $15.00 NW Europe $10.00 $ Singapore (Dubai) 3Q15 $ Q15 $ Q16 $ Q16 $9.70 QTD 16 $8.73 $30.00 $24.00 $18.00 Singapore $12.00 $ Page 6 of 13

7 Crude Oil Differentials LLS- Maya 3Q15 $7.40 4Q15 $9.24 1Q16 $8.92 2Q16 $9.46 QTD 16 $7.47 $25 $20 $15 $10 LLS - Maya $5 LLS - Mars 3Q15 $4.93 4Q15 $4.51 1Q16 $5.17 2Q16 $5.35 QTD 16 $4.67 $10 $8 $6 $4 LLS - Mars $2 LLS - ANS 3Q15 (.37) 4Q15 $1.50 1Q16 $2.85 2Q16 $2.92 QTD 16 $3.05 $21 $14 $7 LLS - ANS ($7) ($14) '14 '16 5-yr Avg LLS - WTI 3Q15 $3.56 4Q15 $1.52 1Q16 $1.77 2Q16 $1.89 QTD 16 $1.64 $32 $24 $16 $8 LLS - WTI ($8) Page 7 of 13

8 Crude Oil Differentials LLS - Brent 3Q Q Q Q16 $1.40 QTD $10 $5 ($5) LLS - Brent ($10) ($15) Brent - WTI 3Q15 $3.32 4Q15 $1.29 1Q16 $1.13 2Q16.49 QTD $32 $24 $16 $8 Brent - WTI ($8) WTI - WTS 3Q15 ($1.38) 4Q Q Q16.82 QTD 16 $1.45 $20 $15 $10 $5 WTI-WTS ($5) Brent - Clearbrook (Bakken) 3Q15 $6.47 4Q15 $2.33 1Q16 $2.64 2Q16.94 QTD 16 $2.22 $60 $45 $30 $15 Brent - Clearbrook (Bakken) ($15) Page 8 of 13

9 # of contracts # of contracts # of contracts Oil Open Interest (MM Contracts) CFTC: Non-Commercial Positions NYMEX WTI NYMEX WTI: Open Interest vs. Price Net Long (Short) Position 1 contract = 1,000 barrels 2 $ , $ , , , , , , , , , , $ WTI ($/bbl) $ , $ Open Interest WTI NYMEX RBOB Net Long (Short) Position 1 contract = 42,000 gallons NYMEX #2 Heating Oil Net Long (Short) Position 1 contract = 42,000 gallons 100,000 75,000 50,000 49,963 49,090 57,829 56,208 50,193 56,169 59,950 63,592 24,000 18,000 12,000 8,904 14,764 20,877 21,661 17,379 17,530 16,454 18,654 25,000 6, Page 9 of 13

10 cents per gallon $ per barrel $ per barrel cents per gallon Shipping Trans-Atlantic Arbitrage: CRUDE OIL Trans-Atlantic Arbitrage: GASOLINE LLS-Brent (Net of Freight) USAC-NWE (Net of Freight) $ Gulf Coast/Europe Arbitrage: ULSD USGC-NWE (Net of Freight) Persian Gulf-USGC: Freight Rate (250' dirty tanker) Trailing 8 weeks $ Total US Product Exports (000 Bbl/d) Total US Product Imports (000 Bbl/d) 6,000 6,000 4,750 4,750 3,500 3,500 2,250 2,250 1, , 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 Page 10 of 13

11 $ per barrel $ per barrel per gallon per gallon per gallon per gallon $ per barrel $ per barrel Energy Futures WTI NYMEX WTI: 12-Month Strip BRENT ICE Brent: 12-Month Strip CL1 CL2 CL3 CL4 CL5 CL6 CL7 CL8 CL9 CL10 CL11 CL12 40 CO1 CO2 CO3 CO4 CO5 CO6 CO7 CO8 CO9 CO10 CO11 CO12 RBOB RBOB NYMEX RBOB: 12-Month Strip ICE RBOB: 12-Month Strip XB1 XB2 XB3 XB4 XB5 XB6 XB7 XB8 XB9 XB10 XB11 XB PG1 PG2 PG3 PG4 PG5 PG6 PG7 PG8 PG9 PG10 PG11 PG12 #2 HEATING OIL GASOIL NYMEX #2 Oil: 12-Month Strip ICE Gasoil: 12-Month Strip HO1 HO2 HO3 HO4 HO5 HO6 HO7 HO8 HO9 HO10 HO11 HO QS1 QS2 QS3 QS4 QS5 QS6 QS7 QS8 QS9 QS10 QS11 QS12 * Only 8 contracts available for European Gas Oil REFINING MARGIN NYMEX 3-2-1: 12-Month Strip REFINING MARGIN ICE 2-1-1: 12-Month Strip Avg Avg. * Only 8 contracts available for European Gas Oil Page 11 of 13

12 Appendix A: Important 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. This research report was prepared by employees of Scotia Howard Weil, a division of Scotia Capital (USA) Inc., who have the title of Research Analyst. All pricing of securities in reports is based on the closing price of the securities principal marketplace on the night before the publication date, unless otherwise explicitly stated. All Equity Research Analysts report to the Head of Equity Research. The Head of Equity Research reports to the Managing Director and Co-Head, Global Capital Markets, who is not and does not report to the Head of the Investment Banking Department. Scotia Howard Weil has policies that are reasonably designed to prevent or control the sharing of material non-public information across internal information barriers, such as between Investment Banking and Research. The compensation of the research analyst who prepared this report is based on several factors, including but not limited to, the overall profitability of Scotiabank, Global Banking and Markets, and the revenues generated from its various departments, including investment banking, trading fees and other types of transactions. Furthermore, the research analyst s compensation is charged as an expense to various Scotiabank, Global Banking and Markets departments, including investment banking. Research Analysts may not receive compensation from the companies they cover. For Scotia Howard Weil Research analyst standards and disclosure policies, please visit For applicable current disclosures for all covered companies, please write to the Scotia Howard Weil Research Department at the following address: Scotia Howard Weil Research Department 1100 Poydras Street, Suite 3500 New Orleans, Louisiana General Disclosures This research report was prepared by employees of Scotia Howard Weil, a division of Scotia Capital (USA) Inc. who have the title of Research Analyst. Scotia Capital (USA) Inc., an SEC registered broker-dealer and a member of FINRA and the NYSE, is wholly owned by Scotia Capital Inc., a Canadian Investment Dealer, and indirectly owned by The Bank of Nova Scotia. Scotiabank, together with "Global Banking and Markets," is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital (USA) Inc. All other trademarks are acknowledged as belonging to their respective owners and the display of such trademarks is for informational purposes only. The frequency of reports is determined by the analyst on a case-by-case basis, driven by external market factors and issuer announcements. Analysts will endeavor to review and publish such estimates and recommendations as soon as possible after the release of material information by the issuer or the occurrence of other relevant events. This will typically involve, at a minimum, a summary of quarterly earnings releases. In addition to Scotia Howard Weil Research, Scotiabank publishes and distributes Scotiabank Global Banking and Markets Equity Research ( Scotiabank Research ), which is a separate research publication. Scotia Howard Weil Research Analysts and Scotiabank Research Analysts are independent from one another and their respective coverage of issuers is different. In addition, because they are independent from one another, Scotia Howard Weil Research Analysts and Scotiabank Research Analysts may have different opinions on the short-term and long-term outlooks of local and global markets and economies. This report is provided to you for informational purposes only. This report is not, and is not to be construed as, an offer to sell or solicitation of an offer to buy any securities and/or commodity futures contracts. The securities mentioned in this report may neither be suitable for all investors nor eligible for sale in some jurisdictions where the report is distributed. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, however, Scotia Howard Weil makes no representation or warranty, express or implied, as to their accuracy or completeness. Scotia Howard Weil has policies designed to make best efforts to ensure that the information contained in this report is current as of the date of this report, unless otherwise specified. Page 12 of 13

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