The ATS Reportatsenergy.com/sample_ats_report/arWednesday.pdfThe ATS Report ... Wednesday.

Copyright 2011, Applied Trading Systems, Inc., 9800 Northwest Frwy., Brookhollow 2 Bldg. Suite 303, Houston, TX 77092 Tel: 713 683 8384; Fax: 713 683 8769

Reproduction permitted for use in local office of subscribers. Distribution to others prohibited without written permission from ATS. 1

Volume 23, Issue 226 The ATS Report Wednesday, Nov 16, 2011 “The Petroleum Industry’s Analyst Since 1988”

Inside The ATS Report Today

Futures Exchange Activitie 1 Technical Analysis–Oil Related 3 Asia Desk 13 Total US 20 PADD II 23 PADD V 25 Technical Analysis–Oil & Gas 2 Market Commentary 4 EIA Statistics 19 PADD I 22 PADD III 24

Crude Oil & Natural Gas

WTI WTI Brent Brent Oman Nat Gas Nat Gas Month DEC JAN JAN FEB JAN DEC JAN Basis $/BBL $/BBL $/BBL $/BBL $/BBL $/MMBTU $/MMBTU Settle 102.59 102.60 111.88 111.51 111.20 3.344 3.483

Change 3.22 3.17 -0.30 -0.24 -0.25 -0.060 -0.059 Open 99.33 99.30 112.20 111.81 111.40 3.407 3.545 High 102.89 102.91 112.50 112.05 111.97 3.439 3.576 Low 98.39 98.43 110.14 109.63 109.66 3.326 3.469

Resist 10330-41, 106, 108+ N/A N/A 3465-3490, 3558-3575* Support 9990-55, 9761* N/A N/A 3330-3212

Refined Products RBOB RBOB HO HO Gas Oil Gas Oil Ethanol

Month DEC JAN DEC JAN DEC JAN DEC Basis $/GAL $/GAL $/GAL $/GAL $/TON $/TON $/GAL Settle 2.6273 2.6319 3.1346 3.1409 994.25 983.25 2.6950

Change 0.0416 0.0398 -0.0367 -0.0331 0.50 -0.75 0.0150Open 2.5902 2.5980 3.1795 3.1783 996.50 987.00 2.6900 High 2.6326 2.6359 3.1798 3.1812 997.75 987.75 2.7050 Low 2.5615 2.5656 3.1083 3.1150 980.00 970.00 2.6710

Resist 26340, 26569* 31565-31652, 320+/-, 323+ N/A N/A Support 25890, 25707, 25469* 31118*, 30970, 30576* N/A N/A



Technical Analysis - Oil & Gas

JAN CRUDE OIL - SHORT TERM TREND IS UP (10177) OBJ: NONE

Resist: 10330-41, 106, 108+ Supprt: 9990-55, 9761* TRP: 97.61 Comment: The market is bullish, powering into a stronger bull phase that could fuel aggressive rallies over the next week. A push past 10341 creates a

swing target to 106 and chance for a blow off to 108-110. Any corrective dips should only last 1-2 days and hold just under 100 to maintain the momentum of the drive. A close under 9761* is needed to alert for a topping reversal turnover.

DEC HEATING OIL - SHORT TERM TREND IS UP (31346) OBJ: NONE

Resist: 31565-31652, 320+/-, 323+ Supprt: 31118*, 30970, 30576* TRP: 305.76 Comment: The market is still bullish, but the drive has stalled up around the 31775 target. Closes over 319

and 32323 are needed to spark another bull wave. Yesterday's pullback hints for another 1-2 days of narrow sideways consolidation. A close under 31118* could add defensive pressures, but only a close under 30576* triggers a topping turnover.

DEC RBOB - SHORT TERM TREND IS SDWYS/DOWN (26273) OBJ: NONE

Resist: 26340, 26569* Supprt: 25890, 25707, 25469* TRP: 265.69 Comment: The market remains short term bearish. However, near term trade is rebounding form recent sharp selloffs and cautions for a retracement to

test against the 26569* resistance point. A close over 26569* will trigger a reversal to the upside and drive rallies back over 270+. If trade is capped by 26569*, look for renewed defensive trade, but key on a close under 25469* to extend selloffs.

DEC NATURAL GAS - SHORT TERM TREND IS DOWN (3344) OBJ: 3330 ACHD

Resist: 3465-3490, 3558-3575* Supprt: 3330-3212 TRP: 37.29 Comment: The market is bearish, accelerating the selloff against a previous monthly swing low at 3330-3212. Yesterday's weak close calls for continued selling, but be alert for a spike low within the

3330-3212 range. A close under 3212 is needed to continue washouts. Any rebounds should struggle to push back through Monday's gap which in turn will maintain bear forces. A close over 3575* is needed to prompt an initial bottoming turn with rallies pushing to attack 3729*.

Technical Analysis By Global Research & Investments LLC 259 MIDDAUGH RD. CLARENDON HILLS, IL 60514 USA PHONE/FAX: (630) 986-8683 EMAIL: [email protected] www.gri2.com



Technical Analysis – Oil Related Financial Instruments & Commodities

DEC US DOLLAR - SHORT TERM TREND IS SDWYS/UP (7850) OBJ: 7931

Resist: 7866, 7915-7932 Supprt: 7789, 7756*, 7717* TRP: 77.17 Comment: The market is showing a bull push past last week's high and signals for rallies to reach for 7900-

7950. Stable action over 7842+ will promote another bull trending day. Any corrections should fight to hold over 7756* which in turn will lead to bull trending trade. A close under 7717* is needed to signal a reversal turnover back to lower levels.

DEC GOLD - SHORT TERM TREND IS UP (177350) OBJ: 184450?

Resist: 1792-1797, 1803-1808 Supprt: 1758-, 1745-1743, 172810* TRP: 1728.10 Comment: In general the market is still bullish, but rallies have been stopped against previous downturnlevels / resistance associated with the 1789-1808

area. A close over 1803 is needed to extend rallies to 184450. The blunted advance against 1803+ alerts for a possible swing high. Look for further pullbacks with a drop under last Thursday's low propelling declines to attack 172810* for a reversing turn into a sustained correction phase.

DEC SILVER - SHORT TERM TREND IS SDWYS/UP (3393) OBJ: NONE

Resist: 34285, 3500-3519, 3599 Supprt: 3349, 3305-3273, 32135* TRP: 3213.5 Comment: The market remains in a short term bull upturn. A surge back over recent weekly highs or close over 3515 should spark a bull leg reaching

for 3700. Recent setbacks caution for additional flagging congestion. View sideways trade over 3305+ as a staging level to attempt further rallies. A roll off through 3305-3273 should drive selloffs to test 32135* support. A close under 32135* marks a lasting turn back to negative trade.

DEC COPPER - SHORT TERM TREND IS SDWYS/UP (35105) OBJ: NONE

Resist: 35405, 35850*-360 Supprt: 34410-342*, 339-33840 TRP: 330.55 Comment: The market is trying to rebound off 33055* support, but trade will need a pop over 360 or close over 35850* to rekindle bull forces.

If trade struggles in the 350's and rejected by 35850*, be ready for follow through selloffs. A slip under 33840 is negative. A close under 33055* is bearish and could add to selloffs into the low 320's. If trade holds 33840, then we may see bull flagging days.

DEC CORN - SHORT TERM TREND IS SDWYS/DOWN (642 3/4) OBJ: 622

Resist: 647-648, 652 1/2*, 660+ Supprt: 633-631 1/2, 622-618 TRP: 652.50 Comment: The market alerts for a peaking turn in the formation and leaves trade vulnerable to selloffs

this week. Sustained action under 631 1/2 will drive selloffs to 622-618. We may see additional sideways trade in the 640's for a few days, but only a close over 652 1/2* triggers a flip back to bull trending trade.



Market Commentary

EURO-ZONE CONCERNS AND SURGE IN CRUDE OIL PRICE OFFSET POSITIVE U.S ECONOMIC NEWS; NYMEX CRUDE UP $3.29 TODAY AT $102.59 ON NEWS OF PIPELINE REVERSA; DOW FALLS 110 POINTS

Wednesday, November 16, 2011: U.S. industrial output showed a sharp increase in October as factory and mining production expanded strongly, suggesting the economy was gaining steam. The Labor Department reported that consumers paid less for gasoline and automobiles in October, pushing down overall prices by 0.1%. But these encouraging reports were offset by lingering concerns about Europe’s debt crisis. Greece’s (new) Prime Minister Lucas Papademos’ government faced a confidence vote today, as the Greek government must pass austerity measures to receive additional financial assistance. Policymakers continue to warn that Europe’s debt crisis poses dangers to the recovering global economy. Italian bond yields which remain at elevated levels, a sign of ongoing risk aversion, and unsustainable if Italy is to survive is a most definite ominous sign. And to what extent the action of the U.S. Congressional Budget “Super-Committee” will impact the financial markets is anyone’s guess. Increasing the U.S. debt limit, which was pretty much a standard procedure before this year, escalated into ‘political games-man-ship’ from which this ‘Super-Committee” was born. The “Super-Committee” is now facing a November 23rd deadline to find $1.2 trillion in spending cuts and new tax revenues. Wall Street appears bored by the whole process and is essentially shrugging off the impact of next week’s deadline.

Be reminded that during the August stand-off, due to action or should we say inaction of Congress, the DJIA plummeted 15%, falling from a July 21st high of 12,724 to a low of 10,818 on August 19th. Today the DOW closed at 11,906, down 110 points for the day and 819 points below the July 21st high, still not fully recovered from the August debacle, pressured by the debt crisis in Europe and a surging crude oil price. Although the stats were volumetrically bullish for crude oil and distillate products, the announced plans to reverse the Seaway crude oil pipeline in 2012 pushed front month NYMEX crude price up $3.22 today, closing at $102.59. This is the highest close since May 10th earlier this year when font month NYMEX crude closed at $103.88. This pipeline (350,000 bpd capacity) currently moves oil from the U.S. Gulf Coast to Cushing, Oklahoma and with the reversal a means to export what is perceived to be surpluses of West Texas Intermediate crude will be provided December NYMEX gasoline price gained 4.16 cpg ($1.75/bbl) to $2.6273 per gallon and December NYMEX heating oil dropped 3.67 cpg ($1.54) to $3.1346 per gallon. Accordingly the December 3:2:1 NYMEX crack plunged $2.57 today with the NYMEX gasoline crack off $1.47 to $7.76, while the NYMEX heating oil crack plunged $4.76 to $29.06, still a ‘lofty’ level. The Brent (1st Month) premium to WTI, closed today at $10.50, the lowest premium since March 31st when a premium of $9.94 was recorded.



EIA (DOE) U.S. Supply and Demand Balance

EIA (DOE) U.S. Supply and Demand Balance

Week Ending Nov 11, 2011

Change From Nov 04, 2011

Comments

Million barrels per day Crude Oil Imports 8.565 -0.053 Canada -0.465

Colombia -0.208 Iraq -0.103 Mexico +0.542 Venezuela +0.375

Domestic Crude Production 5.894 +0.048 Transfer from SPR 0 0 Total U.S. Crude Supply 14.459 -0.005 Crude input to Refineries 14.679 +0.344 Gross Inputs to Refineries 15.036 +0.388 Total Gasoline Imports 0.762 +0.012 Refiner & Blender Finished Gasoline Production

9.016 +0.317

Gasoline Supplied for Domestic Use (Implied Demand)

8.625 -0.046

Total Distillate Imports 0.082 -0.020 Refiner and Blender Distillate Production

4.750 +0.438

Distillate Supplied, Domestic Use (Implied Demand)

4.189 -0.173

Total 4-Week Avg Petroleum Demand Petroleum Demand/ Nov 12, 2010

19.218 18.919

% change +1.58

Current One Week Demand: Last Week’s Demand:

19.311 20.037

% change -3.62

Million Barrels Implied Crude Oil Inventory 336.550 -3.813 Actual Crude Oil Inventory 337.034 -1.056 PADD I +0.859

PADD II -0.728 PADD III -1.274 PADD IV -0.162 PADD V +0.248

Gasoline Inventory 205.159 +0.992 PADD I +0.231 PADD II -0.663 PADD III +1.189 PADD IV +0.218

Distillate Inventory 133.733 -2.136 PADD I +0.312 PADD II -0.724 PADD III -1.700 PADD V -0.109

Total Commercial Oil Stocks 1,736.650 -8.702 Includes SPR Refinery Utilization - % 84.8 +2.2 See table below



Refinery utilization rates for November 4th and November 11th

Refinery Utilization - %

PADD I

PADD II

PADD III

PADD IV

PADD V

Total U.S.

Nov 11, 2011 72.4 87.9 89.0 87.1 75.3 84.8 Nov 04, 2011 72.8 86.7 85.5 89.5 73.2 82.6 Change -0.4 +1.2 +3.5 -2.4 +2.1 +2.2

This week’s EIA (DOE) Report - For the week ending November 11, 2011: U.S. crude oil stocks were down 1.057 million barrels this week, compared to the forecast of a 1.2 million barrels draw, pretty much on target. East of Rockies inventory fell more than 1.3 million barrels while West Coast inventory increased 248,000 barrels. Cushing inventory gained 890,000 barrels to 32.029 million barrels while Mid-Continent crude oil inventory was down 728,000 barrels, as Canadian imports fell 3.255 million barrels to 12.887 million barrels. The East Coast crude oil inventory gained 859,000 barrels while the Gulf Coast crude oil inventory fell 1.274 million barrels. The Rocky Mountains crude oil inventory slipped 162,000 barrels. Implied crude oil inventory calculated at 336.55 million barrels compared to the reported inventory of 337.034 million barrels, a most reasonable check. Imports were down slightly, 371,000 barrels, and refinery utilization increased 2.2%, 1.8% more than the 0.4% increase forecast in yesterday’s outlook. U.S. gasoline inventory increased for the week ending November 11th, gaining 992,000 barrels, compared to Tuesday’s projected draw of 700,000 barrels. The 84,000 barrels increase in gasoline imports and the 2.2% increase in refinery utilization (compared to a forecast increase of 0.4% in the outlook) more than offset relatively strong gasoline demand with gasoline inventory moving higher than forecast. The only region posting a decline in inventory was the Mid-Continent which fell 663,000 barrels. The other regions posted the following increases: East Coast – up 231,000

barrels; Gulf Coast – up 1.189 million barrels; Rocky Mountains - up 218,000 barrels; and West Coast – up 16,000 barrels. U.S. distillate inventory decreased, falling 2.136 million barrels for the week ending November 11th, compared to yesterday’s projected draw of 2.1 million barrels, pretty much right-on. Strong weekly demand and the 140,000 barrels decline in imports more than offset the 2.2% increase in refinery utilization (compared to a forecast increase of 0.4% in the outlook). Regions reported the following changes in distillate inventory: East Coast – up 312,000 barrels; Mid-continent – down 724,000 barrels; Gulf Coast – down 1.7 million barrels; Rocky Mountains area – up 85,000 barrels; and West Coast – down 109,000 barrels. Yesterday’s outlook projected an increase of 0.4% in refinery utilization, with today’s report indicating a 2.2 % increase in refinery utilization. The following changes in refinery utilization are noted for the week: East Coast - down 0.4 % to 72.4%; Mid-Continent up 1.2% to 87.9%; Gulf Coast – up 3.5% to 89.0%; Rocky Mountain – down 2.4 % to 87.1% and the West Coast – up 2.1% to 75.3%. For the week ending November 11th, commercial oil stocks, including the SPR fell 8.7 million barrels to 1,736.65 million barrels, registering the thirteenth decrease in the past sixteen weeks and has fallen more than 24.0 million barrels the last two weeks.



The U.S. Energy Information Administration (EIA) published the following relevant data for gasoline

demand through Friday, November 11th and for gasoline retail prices thru cob Monday, November 14th.

U.S. Finished Gasoline Demand – Million Barrels per Day

Four Week Averages: week ending Week Ending 10/28/11

11/04/11

11/11/11

Year ago 11/12/10

10/28/11

11/04/11

11/11/11

Year Ago 11/12/10

8.657 8.572 8.579 9.095 8.518 8.671 8.625 8.952

Regular U.S. Gasoline Retail Prices – Dollars per Gallon 10/03/11

10/10/11

10/17/11

10/24/11

10/31/11

11/07/11

11/14/11

Year Ago 11/15/10

3.433 3.417 3.476 3.462 3.452 3.424 3.436 2.892 EIA data implies a 46,000 bpd decrease in weekly gasoline demand, with weekly demand a significant 327,000 bpd lower than last year. Four week average demand was up 7,000 bpd while the four week average demand lagged last year by a significant 516,000 barrels. There is little doubt that high gasoline price has impacted gasoline consumption, as consumers strive to reduce discretionary spending. Just look at the comparison of this year’s weekly demand and four week average demand to last year.

According to these IEA stats, for the week ending November 14th, gasoline price increased 1.2 cpg and is 54.4 cpg or $22.85 per barrel higher than last year, an increase of 18.8%. For the year-to-date gasoline price is up 30.4 cpg and is now 14.3 cpg below the July 4th

price. The U.S. Energy Information Administration (EIA) published the following relevant data for distillate demand through Friday, November 11th and for on-highway diesel prices thru cob Monday, November 14th.

U.S. Distillate Demand – Million Barrels per Day

Four Week Averages: week ending Week Ending 10/28/11

11/04/11

11/11/11

Year ago 11/12/10

10/28/11

11/04/11

11/11/11

Year Ago 11/12/10

4.219 4.292 4.294 4.086 4.374 4.362 4.189 3.780

On-Highway Diesel Fuel Prices – Dollars per Gallon 10/03/11

10/10/11

10/17/11

10/24/11

10/31/11

11/07/11

11/14/11

Year Ago 11/15/10

3.749 3.721 3.801 3.825 3.892 3.887 3.987 3.184 EIA data implies a 173,000 bpd decrease in weekly demand with demand exceeding last year by a significant 409,000 bpd. The current four week average demand inched up 2,000 bpd and is 208,000 bpd higher than last year. High on-highway distillate prices and high

residential heating oil prices are impacting demand much less than the response seen in gasoline demand to high prices. This is likely due to the impact of overland freight, where diesel fuel is the primary fuel, with few to no



options, and the beginning of the home heating oil demand season. On-highway diesel price increased 10.0 cpg this week and is now 80.3 cpg or $33.73 per barrel higher than last year, an increase of

25.2%. For the year-to-date, on-highway diesel fuel price is up 72.5 cpg. On-highway diesel price from now through the winter will be supported by heating oil demand and heating oil price.

Residential Heating Oil Prices – Dollars per Gallon

10/03/11

10/10/11

10/17/11

10/24/11

10/31/11

11/07/11

11/14/11

Year Ago 11/15/10

3.692 3.682 3.768 3.798 3.850 3.877 3.942 3.125 Residential heating oil price increased 6.5 cpg this week and is 81.7 cpg or $34.31 per barrel higher than last year, an increase of 26.1%. Today’s Market Reaction: Although the stats were volumetrically bullish for crude oil and distillate products, the announced plans to reverse the Seaway crude oil pipeline in 2012 pushed front month NYMEX crude price up $3.22 today, closing at $102.59. This is the highest close since xxx. This pipeline (350,000 bpd capacity) currently moves oil from the U.S. Gulf Coast to Cushing, Oklahoma and with the reversal a means to export what is perceived to be surpluses of West Texas Intermediate crude will be provided December NYMEX gasoline price gained 4.16 cpg ($1.75/bbl) to $2.6273 per gallon and December NYMEX heating oil dropped 3.67 cpg ($1.54) to $3.1346 per gallon. Accordingly the December 3:2:1 NYMEX crack plunged $2.57 today with the NYMEX gasoline crack off $1.47 while the NYMEX heating oil crack plunged $4.76. Atlantic Basin Physical Gasoline and Distillate Markets: With the U.S. driving season over, the New York harbor gasoline crack slipped 9 cpb from last Wednesday’s close, remaining in negative territory...

With a build of 1.2 million barrels in Gulf Coast gasoline inventory and the 992,000 barrels increase in U.S. gasoline inventory; the retreating gasoline crack emphasizes that gasoline season is over! The U.S. Gulf Coast crack fell $3.46 this week to a negative -$5.12.



The physical heating oil crack in New York harbor fell $2.72 today to $17.19 but is up $3.49 cpb from last Wednesday. It is not surprising that the New York physical crack gave up some of its recent gains, since the crack had moved to such a high level and with crude price surging today.

The U.S. Gulf Coast LS No2 dropped $2.85 today to $15.69 and is up 15 cpb from last Wednesday. It is not surprising that the U.S. Gulf physical crack gave up some of its recent gains, since the crack had moved to such a high level and with crude price surging today.

In Northwest Europe the Rotterdam physical gasoline crack gained $2.52 today to a negative -$3.67 and is up 10 cpb from last Wednesday’s close. Low gasoline prices in the U.S. continue to pressure the R-dam gasoline crack.

The Rotterdam physical gas oil crack was off 33 cpb today to $24.75, but is up $2.93 from last Wednesday’s close. Low refinery utilization in the U.S.; falling U.S. distillate inventories; the primary heating oil season just around the corner; continue to support the Rotterdam gas oil crack.

Atlantic Basin Crude Market: It was reported that North Sea Forties differentials fell for the third consecutive day, with Forties offered at dated flat, down 30 cpb from yesterday. The graph below supports a price for Forties at a premium of 14 cpb to dated Brent, off 7 cpb from yesterday; down 25 cpb from last Wednesday; and $2.10 below the recent September 15th high premium of $2.15 to dated Brent.



West African Crude Oil: Questions remain as to whether the last December Qua Iboe cargo was sold and there were three additional cargoes of Bonny Light made available for December loading. Qua Iboe was valued at a premium of $2.10-$2.30 to dated Brent. The graph below supports a Qua Iboe premium of $1.83 to dated Brent, off 5 cpb from yesterday and down 34 cpb from last Wednesday’s close. Today’s $1.68 Bonny Lt premium to dated Brent is 5 cpb lower than yesterday and 40 cpb below last Wednesday’s close. Bonny Lt lost 6 cpb since last Thursday’s close of a 9 cpb discount to a discount of 15 cpb to Qua Iboe, in line with the historical differential.

The Qua Iboe premium to Bonny Lt moved higher after force majeure was declared on October Bonny Lt barrels. Since force majeure on Bonny Lt was lifted, the Qua Iboe premium to Bonny Lt was slower to respond than anticipated, but has now come back in line with the historical premium.

Russian Urals crude was steady to slightly stronger today at premiums to dated Brent. Yesterday, traders reported that most of November cargoes have been sold at is was felt that once the December lifting programme was announced, market direction will be better defined. The graphical representations below indicate a value for Urals in the Med at a premium of 10 cpb to dated Brent, 5 cpb higher than yesterday and up 7 cpb from last Wednesday. Urals in NWE moved up 7 cpb today to a



premium of 7 cpb to dated Brent, 32 cpb higher than last Wednesday.

The Brent 1st month premium to WTI fell $2.08 today to $10.50; down $8.25 from last Wednesday’s close; $19.44 off the Wednesday, September 21st, high of $29.94; and the lowest premium since $9.94 was recorded on March 31st.

U.S. Crudes: The Light Louisiana Sweet premium to West Texas Intermediate was off $2.10 today at $12.00, and is $5.90 lower than last Wednesday’s close. The recent high premium of $29.50 was recorded on September 22nd.

Heavy Louisiana Sweet dropped $2.20 against to a premium of $13.40 over , and is down $5.30 from last Wednesday’s close. The absolute price is now at a $1.40 premium to , up 60 cpb from last Wednesday.

The Mars Sour premium to WTI was off $2.50 today at $7.75, and is down $6.75 from last Wednesday’s close; the recent high $28.00 premium was recorded on September 6th.



Asia Desk

IEA WARNS OVER JAPANESE OIL DEMAND, HIGH OIL PRICES

In comments made in Tokyo on Wednesday, Maria van der Hoeven, who took over as the executive director of the International Energy Agency (IEA) in September, warned of the impact on its oil demand if Japan allows its nuclear output to fall to zero in 2012. It has currently only 11 out of 54 reactors operating nationwide, and none of the plants which are currently closed for maintenance are likely to be restarted soon because of new stringent stress test requirements which were introduced by the Japanese government in July. With those plants that are currently still operating all having to also close for maintenance by May 2012, if none of the other reactors are allowed to restart, Japan could at that time find itself with no nuclear power. This would be the first time such a situation has occurred since Japan started generating nuclear power in 1966. The IEA calculates that a Japan with no nuclear would need to spend an additional $3 billion per month in 2012 on an extra 460 kbpd of oil and 30 billion cubic meters of LNG.

Van der Hoeven also warned over the consequences of rising crude oil prices on ailing economies in both Europe and “poor developing countries”. She did, however, refrain from calling on OPEC to increase production when it meets in Vienna on December 14. That meeting looks like being just as acrimonious as the June 8 event when the Saudis and the other Gulf Arab producers had their proposal for a production increase blocked by Iran, Algeria, Angola, Venezuela, Libya and Ecuador. We have heard in recent weeks calls from the OPEC price hawks, led by Iran, for the unilateral production increases which the Gulf Arabs made in the aftermath of the June meeting, to be reversed, now that Libyan production has resumed. However the Gulf Arabs will want to keep their production at their recent higher levels, and Kuwait, in particular, has been calling for an increase in production levels. That’s not surprising as it has claimed a recent “spot” production rate of 3.67 million bpd, way above the 2.48 million bpd it was averaging back in 2Q.

MIDDLE EAST CRUDE - AL-SHAHEEN SELLS AT FIRM LEVELS, TENDER AWAITED

Middle East crude was steady to firmer on Wednesday, with premiums for January cargoes of Abu Dhabi’s Murban crude edging slightly higher from recent trades. At least one Murban cargo has traded at a premium to its OSP of 35-40 c/bbl, which is higher than the 30-35 cent premium from earlier in the week. The first January cargoes of Qatar’s heavy sour Al-Shaheen crude to trade this month have been sold by Maersk at record levels that were

sharply higher from the premiums seen last month for December cargoes. After selling a couple of cargoes on Tuesday at premiums to Dubai quotes of $3-3.50/bbl, Maersk has sold a further cargo at the same level. The rise in the premiums achieved by Al-Shaheen has mirrored that achieved by Oman, which last traded at premiums to Dubai of around $3.30-3.40/bbl. It will be interesting to see if the Qatari marketing company, Tasweeq, can achieve similar levels in its monthly sales



tender of Al-Shaheen which closed today, and for which the results may be available on Friday. Tasweeq has tendered for sale five 600 kbbl cargoes of the crude. In other trading news Shell bought two Dubai partials at $111.40/bbl, one each from SK Energy and Unipec. This follows the purchase of a total of four partials by Shell on Tuesday at $111.30-111.40/bbl from the same two companies.

The January Oman futures contract trading on the DME eased just 5 cents lower on Wednesday to $111.62/bbl, equivalent to a premium over Dubai swap quotes of $3.38/bbl, which is up by 33 cents from Monday. The new front-month Brent/Dubai EFS for January advanced by 5 cents to $3.70/bbl. The December Brent/Dubai EFS had been at $3.30/bbl on Tuesday, which was a five month low for the spread.

ASIA-PACIFIC CRUDE - VIETNAM SELLS SONG DOC AT HIGHER PREMIUM Export volumes of sweet crude and condensate from Australia, Papua New Guinea and East Timor will be roughly steady in January from December. The new Kitan field, offshore between Timor-Leste and Australia and operated by Italy’s ENI, is increasing its output, and getting close to its production target of 40 kbpd. The total number of cargoes from the region in January will be 22-24 which is in line with December’s volumes. With continued strong demand in Asia for heavy sweet grades combined with the weaker Dated BFOE, we may see new high premiums for grades such as Pyrenees, Van Gogh, Stybarrow and Enfield. However condensates and lighter crudes will continue to face downward pressure. There was bullish sentiment in the Asia-Pacific crude market on Wednesday as Vietnam's PV Oil awarded its sales tender for a 250 kbbl cargo of Song Doc crude loading January 15-21 to BP at a premium to the Minas formula which was close to $10/bbl. This is up from premiums of around $9.50/bbl which were seen for October and November cargoes of the, and is back to levels last seen in April for a July cargo. PV Oil sold three cargoes, each of 200-400 kbbls, of Te Giac Trang crude loading January 1-5, 9-15 and 16-31 to Shell and Taiyo Oil at

premiums to the Minas formula of between $3.50 and $4/bbl. Sakhalin Energy sold a 730 kbbl cargo of Vityaz crude loading January 23-30 to a Japanese refiner at a premium to Dubai quotes of $5.50-5.90/bbl. That’s slightly lower than last month’s premium of $6/bbl, probably because of the sharp fall in naphtha cracks. After the tender was awarded Sakhalin sold another two cargoes at similar premiums. The Philippines' Petron bought a 730 kbbl cargo of Russian ESPO crude for January delivery from Japan’s Itochu at a premium to Dubai quotes that was just above $7/bbl on a C&F basis. Pertamina’s trading arm, Petral, didn’t award its first purchase tender for sweet crude for January delivery due to high offers. A second purchase tender was closing on Wednesday. India's BPCL has issued a purchase tender for up to 2 million barrels of sweet crude for loading January 1-15. Three extra cargoes of Nigeria's Bonny Light crude have been added to December’s loading programme, which may push premiums for Nigerian grades even lower. Brunei has cut the OSP of its crude for October by $3.02/bbl from September, with its main Seria Light grade set at $116.35/bbl. Brunei for October is now 2 cents higher than Tapis, up



from parity in September. Champion crude’s OSP was set at $116.20/bbl thus maintaining

its 15 c/bbl discount to Seria Light.

ASIAN PRODUCTS - REBOUND FOR NAPHTHA, MOGAS CRACKS, FUEL OIL FALLS Asian naphtha prices have rebounded on Wednesday as the front-month 2H December contract rose by $14/mt to $889.50/mt. The market stayed in its mild contango 50 cents between 2H December and 1H January and 50 cents between the two halves of January. In the cash window BP bought two 2H January cargoes, one from Mabanaft at $890/mt, and the other from Glencore at $891/mt. After falling to close to its 2¾year low on Tuesday, the Brent/naphtha crack rebounded on Wednesday by $18.24/mt to $36.02/mt. Stronger mogas and propane prices seem to be the main reason for the rebound in the naphtha crack, but there is no fundamental reason to expect a sustained recovery. Sharp rebound on Wednesday for naphtha crack

In South Korea, Honam Petrochemical has committed itself to buy a total of almost 600 kt of open-spec naphtha for delivery in 2012 at MOPJ minus $0.50/mt on a C&F Daesan basis and at MOPJ minus $1/mt C&F Yosu. Also KPIC has bought 250 kt of naphtha for 2012 arrival at around MOPJ + $2.50/mt C&F Onsan. In the spot market Honam Petrochemical bought around 50 kt of open-spec naphtha for 2H December arrival at around MOPJ minus $3/mt

C&F Daesan, which is the lowest price paid by a South Korean company in about four months. ADNOC has successfully concluded contracts for 2012 liftings of its splitter grade naphtha with some of its Asian customers at a $17/mt premium to its own formula, but is thought to still be in discussions on term supplies of its low sulphur naphtha and its pentanes plus grade. BPCL sold a 35 kt cargo FOB Mumbai December 5-7 to Total at MOPAG + $9-10/mt, and it still has an outstanding tender to sell 35 kt cargo FOB Kochi December 14-18. In the mogas cash window there were three parcels traded as Gunvor bought a 97RON cargo loading December 6-10 from Shell at $114.60/bbl, and also bought a 92RON parcel loading December 12-16 from Trafigura at $110.70/bbl. In the third deal BP bought a 92RON cargo from Morgan Stanley loading December 1-5 at $111/bbl. The 92RON was assessed at $110.85/bbl, up by $1.35/bbl from Tuesday, while the 97RON price was up 85 cents from Tuesday, and the 95RON was also $1.35/bbl higher at $112.50/bbl. After falling to fresh lows on Tuesday, the mogas cracks against Dubai rebounded on Wednesday by around $1.30/bbl for all three grades, to put the 92RON crack at minus 55 c/bbl, the 95RON crack at $1.10/bbl and the 97RON crack at $3.50/bbl. In tender news Sinopec is looking to buy 12 cargoes, each of 5-6 kt of 98 RON, over the course of 2012 with offers due in by this Friday. Indonesia's Pertamina has confirmed a



purchase contract for 8 million barrels per month of 88RON over 1Q 2012 at MOPS + $1.70/bbl on an FOB basis. In India the state oil refiners are cutting domestic mogas prices by about 3.2% from Wednesday, in the first voluntary reduction since deregulation 18 months ago. Middle distillates In the cash market there were no jet trades and two gas oil deals, both for the 0.5%S grade. Trafigura bought a 150 kbbl parcel loading December 12-16 from BP at MOPS averaged over December 8-14 + $2/bbl, and a 150 kbbl parcel loading December 1-5 from Shell at MOPS averaged over November 29 - December 5 + $2/bbl. The two trades pushed the assessment of the spot premium up to $2.02/bbl, its highest since July 4th 2008, the day after the highest close for WTI futures at $145.29/bbl. Spot gas oil premium is at a 40 month high

The region is still suffering from a lack of supply of gas oil in general, with high sulphur gasoil the most affected. Gas oil stocks in Japan have been falling, while kerosene stocks rose by 2.3% last week to an almost three-year high. There are expectations that demand for fuel for heating in Japan will increase, especially given the prospect of electricity shortages, and this has led refiners to maximise production of kerosene at the

expense of gas oil. However the winter demand for kero has yet to kick in, which has resulted in jet and kero underperforming against gas oil, though there was a small rebound for jet on Wednesday. In the swaps market there was a hefty 600 kbbls of the December gas oil swap traded at $129.89-130.00/bbl, also 300 kbbls of the Dec/Jan spread at $0.98-1.00/bbl, plus Jan/Feb at 55 cents and Dec/Feb at $1.55/bbl. The Dec/Jan spread was narrower by 5-10 cents from Tuesday, and the Dec regrade was wider by 5-10 cents at $1.20/bbl. In tender news China’s Sinopec is looking to buy up to 1.255 million tonnes of gasoil as 2012 term supplies. The tender closes on November 18 with validity of November 22. CPC Taiwan is offering a quarterly cargo of 225-250 kbbls of 500 ppm sulphur gasoil FOB Kaohsiung in a 2012 contract. This tender closes on November 17 with validity of November 24. In a short-term tender Kenya’s KPRL is looking for additional quantities of jet and gas oil; it now requires 96.5 kt of jet and 170 kt of gasoil for delivery from December to February, with the tender closing on November 17. The Aden Refinery Company (ARC) has issued a purchase tender which closes on Thursday for three cargoes, each of 40 kt of 0.5%S gasoil, C&F Aden on dates of December 15-17, 20-22 and 26-28. In a tender closing on Wednesday South Africa's PetroSA is looking to buy 16 kt of 500 ppm sulphur gasoil for delivery December 16-18. Fuel oil Asian fuel oil drifted lower on Wednesday with both the outright prices and the product’s crack drifting lower. The 180 cSt grade fell back by $2.93/mt to $709.06/mt, and the 380 cSt bunker grade dropped by $3.37/mt to



$694.12/mt. The front-month 180 cSt crack against Dubai fell for a fourth day losing another 12 cents to minus $4.84/bbl. There were two trades in the cash market as Hin Leong bought a 20 kt cargo of 380 cSt fuel oil loading December 1-5 from Unipec at MOPS for balance November + $4/mt, which is equivalent to MOPS + $13.79/mt, and Brightoil also bought 20 kt loading December 10-14 from PetroChina at MOPS + $12.50/mt. The swaps market was on the quiet side with just 65 kt of the flat-priced December 180 cSt swap done at $692-692.50/mt. Intermonth spread volumes were also lower than usual and way below the volumes we saw on Tuesday when there was a huge amount of selling pressure: 75 kt of Dec/Jan traded on Wednesday at $11-12/mt, after 920 kt had traded on Tuesday. Likewise there was just 75 kt of Jan/Feb done on Wednesday at $7.10-8.25/mt, down from 270 kt the previous day, and 20 kt of Feb/Mar at $5.25-5.50/mt down from 295 kt. However, only the Feb/Mar spread was markedly narrower than on

Tuesday, down by around 50 cents. Sentiment in the fuel oil market seems to be turning a little bearish with the feeling that December is overprices, and we should see some narrowing of the Dec/Jan spread. In tender news Saudi Aramco has sold three 80 kt cargoes of 180 cSt fuel oil to BP, all FOB Jubail on dates of December 3-5, 8-10 and 18-20, at MOPS 380 cSt + $20-25/mt. Although the market is tight BP seems to have paid a surprisingly high premium for the cargoes. It’s not clear if they are going to take the cargoes to Fujairah for supply into the bunker market there, or to Singapore. In other tender news India’s Essar Oil has offered an 80 kt cargo of 380 cSt fuel oil FOB Vadinar, December 9-13 with the award likely to be made on Thursday. Bunker prices held up better than cargo prices on Thursday, falling by only a dollar to $709-711/mt, so the bunker differential was up by $1.70/mt to a premium of $15.65/mt.



Asia Desk

16 Nov 2011 CRUDE SPREADS US$/BBL Dated Brent / Dubai Cabinda / Brent Tapis / Brent Tapis / Dubai Today 0.93 -0.12 6.73 8.00 Yesterday 0.60 0.04 7.62 8.35 Last Week 3.63 -0.01 6.54 9.98 90 Day Avg 5.66 -0.97 6.17 11.59 SOUR CRACKS Naphtha / Dubai Jet / Dubai Gas Oil / Dubai HSFO 380/ Dubai US$/MTToday -14.97 19.69 20.73 -97.92 Yesterday -16.44 19.60 21.18 -94.77 Last Week -13.76 19.55 19.62 -92.86 90 Day Avg -5.33 19.04 17.81 -106.02 SWEET CRACKS Naphtha / Tapis Jet / Tapis Gas Oil / Tapis LSWR / Minas Today -22.97 11.69 12.73 -4.34 Yesterday -24.79 11.25 12.83 -4.51 Last Week -23.74 9.57 9.64 -1.08 90 Day Avg -16.93 7.44 6.21 -4.43 GRADE SPREADS 95RON / 92RON 95RON / Naphtha Jet / Gas Oil FO 180 / FO 380 US$/MTToday 1.65 16.07 -1.04 14.94 Yesterday 1.65 16.21 -1.58 14.50 Last Week 1.69 21.40 -0.07 10.67 90 Day Avg 2.33 21.28 1.23 7.43 LOCATION SPREADS Naphtha Jet Gasoil HSFO 380 C&F Japan / AG US$/MT Singapore / AG Singapore / AG Singapore / NWE US$/MTToday 30.22 2.20 2.32 61.62 Yesterday 30.48 2.21 2.34 64.24 Last Week 29.95 2.17 2.30 60.65 90 Day Avg 33.58 2.40 2.54 42.36



EIA Statistics

EIA STATISTICS Week Ending Difference Difference Difference 11-11-2011 Latest 4 Week Avg Last Week Last Year Last Week Last Year Last Week Total US BY PADD STOCKS MBBL I II III IV V Crude 337034 337228 338090 364882 -1056 -27848 859 -728 -1274 -162 248 Gasoline 205159 205352 204167 210336 992 -5177 231 -663 1189 218 16 Distillate 133733 142440 135869 159902 -2136 -26169 312 -724 -1700 85 -109Jet 42724 45658 44643 45940 -1919 -3216 -805 -219 -521 -2 -374Resid 36861 35049 36148 40403 713 -3542 163 -22 423 16 133 IMPORTS MBBL/DAY Crude 8565 8749 8618 8089 -53 476 Gasoline 762 681 750 802 12 -40 Heating Oil 82 118 102 82 -20 0 Jet 58 61 116 53 -58 5 Resid 317 282 226 336 91 -19 BY PADD OUTPUT MBBL/DAY I II III IV V Gasoline 9135 9028 8815 9011 320 124 189 222 -75 0 -19 Distillate 4750 4455 4312 4241 438 509 66 52 259 13 47 Jet 1337 1372 1329 1339 8 -2 15 -9 12 -1 -30 Resid 480 524 508 464 -28 16 0 -13 -14 0 0 IMPLIED DEMAND MBBL/DAY Gasoline 8625 8573 8671 9056 -46 -431 Distillate 4189 4292 4362 4394 -173 -205 Jet 1589 1443 1526 1311 63 278 Resid 275 277 323 446 -48 -171 REF. RUNS % CAP. Capacity 84.80 84.03 82.60 82.40 2 2.40 SUPPLY DAYS Gasoline 23.79 23.95 23.55 23.23 0.24 0.56 Distillate 31.92 33.19 31.15 36.39 0.77 -4.47 Jet 26.89 31.64 29.25 35.04 -2.36 -8.15 Resid 134.04 126.53 111.91 90.59 22.13 43.45



EIA Statistics - Total US



EIA Statistics - PADD I



EIA Statistics - PADD II



EIA Statistics - PADD III



EIA Statistics - PADD V

The ATS Reportatsenergy.com/sample_ats_report/arWednesday.pdfThe ATS Report ... Wednesday.

Documents

Transcript of The ATS Reportatsenergy.com/sample_ats_report/arWednesday.pdfThe ATS Report ... Wednesday.