Latest Oil Market Update Thursday, April 21, 2011

Oil prices headed for another weekly gain on Thursday as US inventories fell unexpectedly last week, stock markets rallied and the dollar weakened. At the time of writing, ICE Brent crude had climbed to $124.59/bbl while NYMEX WTI crude was trading at $112.16/bbl. Brent's premium over WTI was at $12.40/bbl on Thursday, having narrowed from over $16.00/bbl last week. While Northwest European and US refinery margins improved somewhat last week, Mediterranean margins deteriorated further on high crude prices.

Saudi Arabia's Oil Minister, Al-Naimi, said on Sunday that the Kingdom had slashed output by 800 kb/d in March, to 8.292 mb/d, due to over supply, despite shuttered Libyan supplies and soaring prices. A high degree of uncertainty regarding actual production levels arguably add to current market volatility. The latest IEA Oil Market Report assessed Saudi crude production at 8.9 mb/d in March.

Despite still rising oil prices, US weekly demand readings through April 15 appeared somewhat stronger, with four-week average total product demand up by 1.2% year-on-year. However, recent strength may stem from a mismatch in year-on-year comparisons of pre-Easter holiday deliveries versus 2010 when the holiday fell earlier in April. Moreover, declines in gasoline demand, down by 1.8% year-on-year on a four-week average basis, remained stark, signalling that price rises may be weighing on demand.

US oil inventories fell by 6.7 mb in the week ending 15 April. Lower crude oil imports drove a 2.3 mb draw in crude oil stocks, while inventories held at Cushing, Oklahoma, edged 0.8 mb lower from their record level of 41.9 mb reached the previous week. Gasoline stocks declined by 1.6 mb, shedding a total of 33 mb over the past nine weeks. Distillates dropped by 2.5 mb, with ultra low sulphur diesel bearing the brunt of the stock-draw. Refinery utilisation rose to 82.5% of capacity, from 81.4% in the previous week, on a recovery in East Coast runs from last week's record-low.

In Japan, three refineries, with a combined capacity of 625 kb/d remain closed, but other refineries are compensating for the lost output by raising capacity and utilisation rates where possible. The latest weekly report data from the Petroleum Association of Japan (PAJ) show that Japanese crude runs had rebounded to 3.31 mb/d in the week ending 16 April, representing 82.7% utilisation of total capacity (of 4 mb/d), but a high of 94.6% of operable capacity (assessed at 3.5 mb/d). The country’s trade ministry announced Wednesday that the amount of oil refineries are required to hold will stay at 45 days for another month, until 20 May, to ensure supply to the country’s quake hit Tohoku region. Japan lowered the oil demand cover requirements from 70 days following the disaster.

• Oil prices headed for another weekly gain on Thursday as US inventories fell unexpectedly last week. Prices were also supported by a stock market rally and a sharply weaker dollar.• Saudi Arabia's Oil Minister, Al-Naimi, said Sunday that the Kingdom had slashed output by 800 kb/d in March, to 8.292 mb/d, due to over supply and despite shuttered Libyan supplies and soaring prices. The latest OMR assessed Saudi production at 8.9 mb/d in March.• European crude demand remains muted by high refinery maintenance and poor margins. While Northwest European margins improved somewhat last week, Mediterranean margins deteriorated further on high crude prices.

Physical Crude Prices ($/bbl)

75

85

95

105

115

125

135

Jan Feb Mar AprDated Brent WTI M th1(Adj) Dubai M th1(Adj)

US Weekly Total Gasoline StocksFive-Year Range

170

180

190

200

210

220

230

240

250

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average

2010 2011

Source: EIA

Latest Oil Market Update:

Oil Prices

April 20, 2011 High Low 20 Apr close 13 Apr close Δ Change % ChangeNYMEX WTI Mth1 (Adj) 111.66 107.96 111.45 107.11 4.34 3.89

NYMEX WTI Mth2 (Adj) 111.91 107.71 4.20 3.75

NYMEX WTI Mth3 (Adj) 112.17 108.24 3.93 3.50

ICE Brent Mth1(Adj) 124.23 121.10 123.85 122.88 0.97 0.78

NYMEX No 2 Mth 1 (¢/Gal) 323.37 315.11 322.14 320.28 1.86 0.58

NYMEX RBOB Mth1 (¢/Gal) 328.16 322.55 327.73 324.24 3.49 1.06

ICE Gasoil Mth1 (Adj) ($/T) 1031.00 1005.75 1023.50 1017.75 5.75 0.56

NYMEXHenry Hub(Mth1)($/mmBtu) 4.34 4.27 4.31 4.14 0.17 3.94

Weekly Data

US Weekly Stock ChangesWeek ending 15 Apr 11

EIA (mb)

ProductStock Level

Change Vs

previous week

Change Vs previous year

Crude 357.0 -2.3 1.1

Distillate 148.3 -2.5 -0.5

Motor Gasoline 208.1 -1.6 -16.8

Heating Oil 33.5 -0.6 -9.9

RFG gasoline 0.8 0.2 -1.0

Kerosene 41.2 -0.2 -1.4

Crude Runs (mb/d) 14.1 0.1 -0.6

Thursday, April 21, 2011

NYMEX Crack Spreads ($/bbl)Front Month Closing Prices

0

5

10

15

20

25

30

35

Jan Feb Mar AprRBOB No.2 Heating Oil

Source: NYMEX

Crude Futures Prices ($/bbl)Front Month Closing Prices

75

85

95

105

115

125

Jan Feb Mar Apr

NYMEX WTI ICE Brent

Source: ICE, NYMEX

Physical Crude Prices ($/bbl)

75

85

95

105

115

125

135

Jan Feb Mar AprDated Brent WTI Mth1(Adj)

Dubai Mth1(Adj)

NYMEX WTI Forward Price Curve

104105106107108109110111112113114

1 2 3 4 5 6 7 8 9 10 11 12

$/bbl

23-Mar-11 06-Apr-1113-Apr-11 20-Apr-11

Source: NYMEX

US Weekly Total Crude Oil StocksFive-Year Range - Excluding SPR

280

300

320

340

360

380

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average2010 2011

Source: EIA

US Weekly Total Gasoline StocksFive-Year Range

170

180

190

200

210

220

230

240

250

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average

2010 2011

Source: EIA

US Weekly Total Distillate StocksFive-Year Range

90

100

110

120

130

140

150

160

170

180

190

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average2010 2011

Source: EIA

US Weekly Refinery ThroughputsFive-Year Range

11

12

13

14

15

16

17

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average2010 2011

Source: EIA

US Weekly Gasoline SuppliedFive-Year Range

8.4

8.6

8.8

9.0

9.2

9.4

9.6

9.8

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average

2010 2011

Source: EIA

US Weekly Distillate SuppliedFive-Year Range

3.03.23.43.63.84.04.24.44.64.85.0

Jan Apr Jul Oct

mb

Range 2006-2010 5-yr Average

2010 2011

Source: EIA

Japanese Weekly Refinery Throughput

2.8

3.0

3.2

3.4

3.6

3.8

4.0

4.2

4.4

4.6

Jan Apr Jul Oct

mb/d

2008 2009

2010 2011

Source:

Japanese Weekly Finished Product Stocks (incl. naphtha)

70

75

80

85

90

95

100

105

Jan Apr Jul Oct

mb

2008 2009

2010 2011

Source: PAJ

Source: Platts

Latest Oil Market Update:

Full-Cost Refinery Margins ($/Bbl) Average for Week ended

Jan-11 Feb-11 Mar-11 Δ Month Δ 23-Mar-11 30-Mar-11 6-Apr-11 13-Apr-11 20-Apr-11 Δ Week ΔNW Europe

Brent (Cracking) 1.15 0.18 0.54 0.36 0.38 1.70 0.34 -0.67 -0.19 0.48 Urals (Cracking) 2.88 1.88 3.15 1.27 3.22 4.58 3.50 2.85 3.04 0.19 Brent (Hydroskimming) -2.49 -2.86 -2.44 0.41 -2.24 -1.70 -2.98 -4.04 -3.85 0.18 Urals (Hydroskimming) -3.75 -4.04 -3.86 0.18 -3.62 -3.07 -4.23 -5.15 -5.21 -0.05

MediterraneanEs Sider (Cracking) 2.05 0.89 1.74 0.85 2.13 3.24 2.14 2.31 1.76 -0.55 Urals (Cracking) 1.71 0.66 0.55 -0.11 0.38 1.67 0.37 0.04 -0.17 -0.21 Es Sider (Hydroskimming) -4.25 -4.51 -2.85 1.67 -1.93 -1.57 -2.38 -2.39 -3.57 -1.17 Urals (Hydroskimming) -5.95 -6.22 -7.08 -0.86 -7.21 -6.49 -7.64 -8.64 -9.10 -0.46

US Gulf CoastBonny Light (Cracking) -2.52 -4.08 -3.53 0.55 -4.44 -2.97 -2.97 -3.55 -1.17 2.38 Brent (Cracking) -4.22 -5.44 -4.82 0.62 -5.78 -3.69 -3.88 -5.69 -3.95 1.74 LLS (Cracking) -0.65 -2.21 -0.61 1.60 -1.11 1.01 -0.14 -1.42 -0.08 1.33 Mars (Cracking) -1.07 -1.90 -1.84 0.06 -3.78 -0.02 -0.17 -1.81 -0.34 1.47 Mars (Coking) 2.40 0.57 1.86 1.28 0.38 3.41 3.33 2.21 4.15 1.94 Maya (Coking) 7.01 7.87 7.15 -0.73 7.70 7.20 6.03 6.13 7.35 1.22

US West CoastANS (Cracking) -1.85 3.54 -0.44 -3.99 0.40 1.88 2.19 0.77 1.60 0.83 Kern (Cracking) 3.41 10.25 1.67 -8.59 2.55 2.22 3.83 0.05 2.42 2.37 Oman (Cracking) -2.21 0.41 4.83 4.42 4.94 7.60 7.74 3.30 4.10 0.79 Kern (Coking) 10.37 18.75 13.45 -5.30 15.12 13.77 14.85 13.92 15.04 1.12

SingaporeDubai (Hydroskimming) -2.22 -1.75 -1.56 0.19 -1.29 -0.83 -0.56 -1.68 -2.19 -0.50 Tapis (Hydroskimming) -4.63 -5.03 -8.46 -3.43 -8.64 -8.65 -9.76 -10.70 -10.26 0.44 Dubai (Hydrocracking) 1.67 1.16 2.51 1.35 2.98 3.30 3.41 2.69 2.21 -0.48 Tapis (Hydrocracking) -2.61 -3.61 -5.91 -2.30 -5.93 -6.30 -7.69 -8.64 -8.24 0.40

Thursday, April 21, 2011

Med Refining Margins

-12

-10

-8

-6

-4

-2

0

2

4

Jan Feb Mar Apr

$/bbl

Urals Hydroskimming Urals Cracking

USGC Refining Margins

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

Jan Feb Mar Apr

$/bbl

Mars Cracking Bonny Cracking

Singapore Refining Margins

-5

-4

-3

-2

-1

0

1

2

3

4

5

Jan Feb Mar Apr

$/bbl

Dubai Hydroskimming Dubai Hydrocracking

NWE Refining Margins

-3

-2

-1

0

1

2

3

4

5

Jan Feb Mar Apr

$/bbl

Brent Cracking Urals Cracking

USWC Refining Margins

-10

-5

0

5

10

15

20

25

30

Jan Feb Mar Apr

$/bbl

Kern Coking ANS Cracking

China Refining Margins

-12

-10

-8

-6

-4

-2

0

2

4

6

Jan Feb Mar Apr

$/bbl

Dubai Cracking Cabinda Hydroskimming

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Fundamentals:

Demand

Demand (mb/d) Annual Growth (%)

1Q11 2Q11 3Q11 4Q11 2011 1Q11 2Q11 3Q11 4Q11 2011North America 23.95 23.67 24.17 23.93 23.93 1.6 -0.4 -0.3 -0.3 0.1Europe 14.18 14.03 14.63 14.57 14.35 0.0 -0.7 -1.1 -0.8 -0.7Pacific 8.15 7.42 7.63 8.17 7.84 -0.5 1.5 0.5 1.5 0.7Total OECD 46.28 45.12 46.43 46.67 46.13 0.7 -0.2 -0.4 -0.2 0.0Asia 20.51 20.80 20.29 20.96 20.64 6.3 4.5 4.8 2.1 4.4Middle East 7.43 7.71 8.17 7.53 7.71 4.6 3.0 2.8 2.1 3.1Latin America 6.21 6.46 6.60 6.51 6.45 3.0 2.9 2.5 2.2 2.6FSU 4.30 4.22 4.46 4.46 4.36 2.2 1.6 1.8 1.2 1.7Africa 3.33 3.38 3.35 3.38 3.36 4.4 2.6 3.2 2.3 3.1Europe 0.71 0.72 0.72 0.74 0.72 0.7 2.1 1.9 1.0 1.4Total Non-OECD 42.49 43.29 43.60 43.56 43.24 4.8 3.5 3.6 2.0 3.5World 88.77 88.41 90.03 90.23 89.36 2.6 1.6 1.5 0.9 1.6

US 19.28 19.03 19.51 19.24 19.27Europe 5* 8.77 8.57 8.90 8.81 8.76China 9.85 10.02 9.88 10.14 9.97Japan 4.69 4.09 4.36 4.67 4.45India 3.49 3.54 3.22 3.49 3.44Russia 3.01 2.99 3.24 3.18 3.11Brazil 2.68 2.78 2.87 2.87 2.80Saudi Arabia 2.53 2.88 3.17 2.65 2.81Canada 2.25 2.18 2.24 2.23 2.23

OPEC

OPEC Crude Production & Capacity (mb/d)

Jan 2011 Feb 2011 Mar 2011Sustainable Production

Supply Supply Supply Capacity1

Algeria 1.27 1.28 1.28 1.32 0.04 1.35

Angola 1.68 1.60 1.68 1.84 0.16 2.01

Ecuador 0.48 0.50 0.51 0.51 0.00 0.50

Iran 3.66 3.68 3.68 3.70 0.02 3.68 1 Capacity levels can be reached within 30 days and sustained for 90 days.

Kuwait2 2.31 2.35 2.42 2.55 0.13 2.55 2 Includes half of Neutral Zone production.

Libya 1.58 1.39 0.45 1.80 1.35 1.82 3 Nigeria's current capacity estimate excludes some 250 kb/d of shut-in capacity.

Nigeria3 2.24 2.16 2.05 2.50 0.45 2.66 4 Includes upgraded Orinoco extra-heavy oil assumed at 440 kb/d in March.

Qatar 0.82 0.82 0.82 1.00 0.18 0.98

Saudi Arabia2 8.80 8.90 8.90 12.10 3.20 12.10

UAE 2.44 2.48 2.52 2.70 0.18 2.74

Venezuela4 2.21 2.20 2.20 2.35 0.15 2.29

OPEC-11 27.49 27.35 26.51 32.38 5.87 32.67

Iraq 2.66 2.73 2.69 2.75 0.06 2.78

Total OPEC 30.14 30.08 29.20 35.13 5.93 35.45

World Balance Summary

DEMAND 2Q10 3Q10 4Q10 2010 1Q11 2Q11 3Q11 4Q11 2011OECD Demand 45.2 46.6 46.7 46.1 46.3 45.1 46.4 46.7 46.1

NON-OECD Demand 41.8 42.1 42.7 41.8 42.5 43.3 43.6 43.6 43.2

World Demand 87.0 88.7 89.4 87.9 88.8 88.4 90.0 90.2 89.4SUPPLY

OECD North America 14.0 14.1 14.4 14.1 14.4 14.1 14.2 14.4 14.3OECD Europe 4.2 3.8 4.2 4.2 4.3 4.1 4.0 4.2 4.1OECD Pacific 0.6 0.6 0.6 0.6 0.5 0.6 0.6 0.7 0.6

Total OECD Supply 18.9 18.5 19.2 18.9 19.2 18.8 18.8 19.2 19.0NON-OECD Supply 29.7 29.9 30.0 29.8 30.2 30.4 30.4 30.6 30.4

of which FSU 13.5 13.5 13.7 13.6 13.7 13.8 13.6 13.7 13.7Processing Gains 2.3 2.3 2.3 2.3 2.3 2.3 2.4 2.4 2.3Global Biofuels 2.0 2.1 1.8 1.8 1.5 1.9 2.3 2.1 1.9Total Non-OPEC 52.8 52.8 53.3 52.8 53.2 53.5 53.9 54.2 53.7OPEC Crude 29.1 29.3 29.5 29.2 29.8OPEC NGLs 5.1 5.3 5.5 5.3 5.7 5.7 6.0 6.0 5.9

Total OPEC 34.2 34.6 35.0 34.5 35.5Total OPEC incl. Angola & Ecuador 34.2 34.6 35.0 34.5 35.5World Supply 87.0 87.4 88.3 87.3 88.7

Stock Change & CallOECD Stock Change (Total Oil) 0.9 -0.4 -0.8 0.0 0.0

Total Stock Change & Misc 0.0 -1.3 -1.2 -0.6 0.0

Adjusted Call on OPEC & Stock change 28.1 29.9 30.6 29.4 29.5 28.9 29.9 29.7 29.5

5 Yr Avg Feb-10 Dec-10 Jan-11 Feb-11 Chg kb/d Change mb Vs Yr-1 (mb) Vs 5 yr avgVolume (mb)

Crude 972 992 956 981 979 -42 -1.3 -12.5 7.2

Total Products 1,399 1,442 1,420 1,459 1,412 -1529 -47.4 -30.4 12.7Total Oil 2,653 2,709 2,664 2,727 2,676 -1639 -50.8 -33.4 23.0

Days Cover (of forward demand)By Total Oil 59.6 57.6 59.1 59.2

By Total Products 31.7 30.7 31.6 31.3

OMR: 12 April 2011

Spare Capacity vs March 2011

Supply

End-2011 Sustainable

Production Capacity