IEA Oil Market Nov 09 Report

12 November 2009
HIGHLIGHTS

• Crude oil prices rose to their highest level in more than a year in
October with WTI and Brent futures up an average of $6/bbl, to
$75.82/bbl and $73.93/bbl, respectively. Growing expectations for
economic recovery boosted markets, with WTI reaching over $81/bbl
before settling in a $75‐80/bbl range by early November.
• Global oil supply in October rose by 635 kb/d to 85.6 mb/d. OPEC
production attained its highest level since January 2009, up by 110 kb/d
to 29.0 mb/d. The ‘call on OPEC crude and stock change’ for 2010 is
revised up 100 kb/d to 28.5 mb/d, on higher demand and a 300 kb/d
downward revision to OPEC NGLs. The 2009 call averages 28.7 mb/d.
• Non‐OPEC supply is revised up 130 kb/d for 2009 and 350 kb/d for
2010 on stronger US GOM, Norway and Russia estimates. Output is
forecast at 51.1 mb/d in 2009 and 51.9 mb/d in 2010. Production
rose 380 kb/d in October to 51.4 mb/d as North Sea maintenance
ended. Tropical Storm Ida shut‐in 560 kb/d (43%) of US GOM output
in early November, though reports indicate no lasting damage.
• Global oil demand is revised up 210 kb/d for 2009 and 140 kb/d for
2010, on stronger preliminary data in OECD North America and
buoyant demand in non‐OECD Asia/Middle East. Global demand is on
track for year‐on‐year growth in 4Q09 for the first time since 2Q08 and
is now seen averaging 84.8 mb/d in 2009 (‐1.5 mb/d year‐on‐year) and
86.2 mb/d in 2010 (+1.3 mb/d versus 2009).
• OECD industry stocks rose by 1.6 mb in September to 2,774 mb, 4.3%
above last year’s level. Gasoline and distillates built in North America
while crude and distillates drew in the Pacific and Europe, respectively.
End‐September forward demand cover fell to 60.0 days from 60.9
days, but remained 3.8 days higher than a year ago.
• Global refinery crude throughput in 4Q09 is reduced by 0.3 mb/d to
72.8 mb/d as higher crude oil prices, falling OECD demand and high
middle distillate inventories continued to undermine margins. Higher
China and Other Asia estimates, following stronger 3Q09 data, only
partly offset downward revisions from lower reported OECD runs.

12 November 2009

OMR PUBLISHING SCHEDULE – 2010

Please find below the 2010 release dates for the Oil Market Report:
Friday 15 January
Thursday 11 February
Friday 12 March
Tuesday 13 April
Wednesday 12 May
Thursday 10 June
Tuesday 13 July
Wednesday 11 August
Friday 10 September
Wednesday 13 October
Friday 12 November
Friday 10 December

This information is also available at: oilmarketreport.org/schedule and
omrpublic.iea.org/schedule.

The 2010 Edition of the Medium‐Term Oil Market Report (MTOMR) will be
published in late June 2010.

TABLE OF CONTENTS
HIGHLIGHTS....................................................................................................................................................................................... 1
NOT SO DISCONNECTED? .......................................................................................................................................................... 4
DEMAND ............................................................................................................................................................................................. 5
Summary........................................................................................................................................................................................... 5
Global Overview ............................................................................................................................................................................ 5
OECD ............................................................................................................................................................................................... 7
North America .......................................................................................................................................................................... 8
Europe ....................................................................................................................................................................................... 10
Pacific ......................................................................................................................................................................................... 12
Non-OECD ................................................................................................................................................................................... 13
China .......................................................................................................................................................................................... 13
Other Non-OECD.................................................................................................................................................................. 15
SUPPLY ................................................................................................................................................................................................ 18
Summary......................................................................................................................................................................................... 18
OPEC Crude Oil Supply ............................................................................................................................................................. 19
OPEC NGLs .................................................................................................................................................................................. 21
Non-OPEC Overview ................................................................................................................................................................. 21
Minimal Impact of Tropical Storm Ida on US Gulf of Mexico Upstream Operations .............................................. 22
Biofuels Update ........................................................................................................................................................................ 22
OECD ............................................................................................................................................................................................. 23
North America ........................................................................................................................................................................ 23
Going to California: Shrinking PADD 5 Output Redirects Crude Flows .................................................................. 24
North Sea.................................................................................................................................................................................. 25
Pacific ......................................................................................................................................................................................... 26
Former Soviet Union (FSU) ....................................................................................................................................................... 26
Other Non-OPEC........................................................................................................................................................................ 27
OECD STOCKS ................................................................................................................................................................................ 29

Summary......................................................................................................................................................................................... 29
OECD Stock Position at End-September and Revised Preliminary Data ................................................................ 29
Analysis of Recent OECD Industry Stock Changes .............................................................................................................. 30
OECD North America........................................................................................................................................................... 30
OECD Europe.......................................................................................................................................................................... 31
OECD Pacific ........................................................................................................................................................................... 32
Recent Developments in Singapore and China Stocks......................................................................................................... 33
PRICES ................................................................................................................................................................................................. 35
Summary......................................................................................................................................................................................... 35
Market Overview ......................................................................................................................................................................... 35
Futures Markets ............................................................................................................................................................................ 36
Spot Crude Oil Markets ............................................................................................................................................................. 37
WTI – For Which The Bell Tolls? ....................................................................................................................................... 38
Spot Product Prices ..................................................................................................................................................................... 39
Refining Margins ............................................................................................................................................................................ 40
End-User Product Prices in October ....................................................................................................................................... 41
Freight ............................................................................................................................................................................................. 42
REFINING ........................................................................................................................................................................................... 43
Summary......................................................................................................................................................................................... 43
Global Refinery Overview .......................................................................................................................................................... 43
Global Refinery Throughput ...................................................................................................................................................... 44
OECD Refinery Throughput...................................................................................................................................................... 44
Non-OECD Refinery Throughput ............................................................................................................................................ 46
OECD Refinery Yields ................................................................................................................................................................ 47
Refining – Is It Always Darkest in the Hour Just Before Dawn? ........................................................................................ 49
TABLES................................................................................................................................................................................................ 51

M ARKET O VERVIEW I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT
NOT SO DISCONNECTED?

Concerns persist over an apparent disconnect between prevailing market fundamentals and $75‐$80/bbl
crude prices. True, OPEC nominal spare capacity is around 6.5 mb/d, and OECD inventory demand cover
only just dropped back to 60 days at the end of September. But equally, the extent to which global oil
supply in 2009 has matched the downward path of oil demand is striking. Quarterly demand began
rising again in 3Q09 after six successive quarters of decline, but only after having lost 3.5 mb/d from late‐
2007 highs in the face of a game‐changing economic recession.
Non‐OPEC supply and OPEC NGL have risen marginally since mid‐2008, but OPEC production curbs at
their height took around 3 mb/d off the market (although leakage has been evident since 1Q09). So, the
crude market ‘surplus’ (as distinct from middle distillates) was largely a hangover from last year’s economic
collapse, since when upstream supply has broadly matched demand. Meanwhile, concerns persist about
the adequacy of upstream spending and capacity ahead of potential demand rebound, while project costs
have remained stubbornly high. So the sub‐$40/bbl prices seen at the turn of the year were, purely from a
crude perspective, likely to prove short‐lived. Add in a heady brew of loose monetary policy, surging
equities and a weaker dollar, plus a belated arrival of the season’s first Atlantic hurricane to threaten oil
infrastructure, and today’s crude prices may not be as disconnected as first appears. Of course, if upward
price momentum persists, this risks endangering economic recovery. But equally, if economic prognoses
are too optimistic, or the winter stays mild, market sentiment could easily weaken once again.
Pricing dynamics and the interplay between m b/d Global Oil Supply/Demand Balance
fundamental and financial flows do remain difficult to 88
explain though. Newly disaggregated CFTC data on
futures market activity by swap dealers fails to 87
demonstrate a primary price‐driving role for this 86

segment of the market. The regulatory spotlight in the
US and Europe is now shifting to the larger and more 85
opaque over‐the‐counter (OTC) derivatives sector. 84
1Q07 3Q07 1Q08 3Q08 1Q09 3Q09
The interpretation of physical market fundamentals also Global Supply Global Dem and
remains clouded by issues of timeliness and availability
of data. This affects all countries – OECD and non‐OECD alike. However, since non‐OECD countries will
account for all of future demand growth (OECD demand likely peaked in 2005), the availability of regular
data from these economies will come into ever‐sharper focus. This makes the recent discontinuation of
public reporting of Chinese inventory data unfortunate.
The past month has also seen discussion of further apparent disconnects in the pricing arena, which may
ultimately prove less puzzling than they first appear. Saudi Arabia next year will shift the pricing basis for its
North American crude sales from WTI to the Argus Sour Crude Index. This is logical in terms of crude quality
and since WTI prices can swing widely due to fluctuating imports from Canada and logistical constraints
around the Cushing delivery point for the WTI contract. The debate on abandoning the dollar for a
substantial portion of crude oil sales also continued, although major producers and consumers were keen to
play this down. With more than 60% of global currency reserves held in dollars, not least by the Mideast Gulf
producers and by China, the financial implications of dropping the dollar would be dire for these players in the
short to medium term. Finally, much has been made of the disconnect between spot and contract natural gas
prices. But a multitude of suppliers competing within a market where demand has collapsed was always
likely to see lower spot gas prices in order to clear the market. One upshot may be that highly competitive
spot natural gas will put a further brake on OECD heating oil sales for the coming winter. The market has
flipped from the 2007/early‐2008 situation, when distillates provided a strong prop for crude prices, to one in
which they could now exert downward pressure. Despite recent signs of readjustment in the sector, OECD
refiners may therefore face high middle distillate stocks and an imperative to curb runs for a while longer.
4 12 N OVEMBER 2009

I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT D EMAND
DEMAND

Summary
• Forecast global oil demand is revised up by 210 kb/d for 2009 and by 140 kb/d for 2010, following
stronger‐than‐expected preliminary data in OECD North America and buoyant demand in non‐OECD
Asia and the Middle East. Global oil demand is now averaging 84.8 mb/d in 2009 (‐1.7% or ‐1.5 mb/d
year‐on‐year) and 86.2 mb/d in 2010 (+1.6% or +1.3 mb/d versus 2009). The pace of demand
contraction is easing in the OECD, while demand in non‐OECD countries is exceeding expectations.
This would suggest that global demand is well on track for resumed year‐on‐year growth in 4Q09, for
the first time since 2Q08.

• Forecast OECD oil demand has been increased by 80 kb/d for 2009 and 10 kb/d for 2010. Upward
revisions in North America and the Pacific offset downward adjustments in Europe. Oil demand is
thus expected to contract by 4.3% year‐on‐year (‐2.1 mb/d) to 45.5 mb/d in 2009 and remain largely
flat in 2010 (‐0.1%). However, the demand picture remains uncertain, notably in the US. Weekly‐to‐
monthly data revisions become more difficult to anticipate, and diesel demand – strongly correlated
to economic activity – continues to languish. It would thus seem that the ‘real’ US economy, as
opposed to the financial one, is struggling to recover, despite the end of the recession.

Global Oil Demand (2008-2010)
(millio n barrels per day)
1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 3Q10 4Q10 2010
Africa 3.2 3.2 3.1 3.2 3.2 3.2 3.2 3.2 3.3 3.2 3.3 3.3 3.3 3.4 3.3
Americas 30.5 30.4 29.6 29.9 30.1 29.3 28.9 29.2 29.7 29.3 29.4 29.3 29.7 29.9 29.6
Asia/Pacific 26.7 25.7 25.0 25.1 25.6 25.7 26.0 25.7 25.7 25.8 26.5 26.3 25.9 26.1 26.2
Europe 16.1 15.8 16.3 16.2 16.1 15.6 15.0 15.2 15.5 15.3 15.5 15.0 15.3 15.5 15.4
FSU 4.3 4.1 4.3 4.2 4.2 4.0 3.9 4.1 4.1 4.0 4.1 4.0 4.2 4.2 4.1
Middle East 6.7 7.1 7.6 7.0 7.1 6.7 7.3 7.8 7.2 7.2 7.1 7.6 8.1 7.5 7.6
World 87.5 86.4 85.9 85.4 86.3 84.6 84.2 85.1 85.5 84.8 86.0 85.5 86.5 86.7 86.2
Annual Chg (%) 1.2 1.0 -0.4 -2.6 -0.2 -3.3 -2.5 -0.9 0.1 -1.7 1.7 1.6 1.6 1.4 1.6
Annual Chg (mb/d) 1.0 0.9 -0.4 -2.3 -0.2 -2.9 -2.2 -0.8 0.0 -1.5 1.4 1.4 1.4 1.2 1.3
Changes from last OMR (mb/d) 0.00 0.00 -0.01 -0.01 -0.01 0.01 0.05 0.52 0.28 0.22 0.00 0.15 0.25 0.17 0.14

• Forecast non‐OECD oil demand has been adjusted up by around 130 kb/d for both 2009 and 2010,
following a reassessment of the demand outlook in Asia (China) and the Middle East (Saudi Arabia).
Growth in both countries continues to be largely driven by ‘other products’ in China, reflecting
stimulus‐induced infrastructure spending, and direct crude burning in Saudi Arabia for power
generation. Demand is now expected to average 39.3 mb/d in 2009 (+1.6% or +0.6 mb/d year‐on‐
year) and 40.7 mb/d in 2010 (+3.6% or +1.4 mb/d versus 2009).

Global Overview
This month’s report has revised up forecast oil demand for both 2009 and 2010, on the back of surging
demand in China and Saudi Arabia, as well as somewhat higher‐than‐anticipated data for the US. Thus,
global oil demand is expected to average 84.8 mb/d in 2009 (‐1.7% or ‐1.5 mb/d year‐on‐year and
+210 kb/d higher when compared with our last report). Next year, oil demand is expected to rise to
86.2 mb/d (+1.6% or +1.3 mb/d versus 2009 and +140 kb/d higher than previously expected). Several
developments are worth noting:
According to preliminary data, year‐on‐year demand growth among the world’s twelve largest
consumers – US, Europe 5 (France, Germany, Italy, Spain & UK), China, Japan, India, Russia, Brazil,
Saudi Arabia, Canada, Korea, Mexico and Iran – was marginally positive in September (+0.03%), for
the first time since July 2008. As these countries collectively account for over 70% of global demand,
this could be interpreted as proof that the global economy is on the mend (although total global
12 N OVEMBER 2009 5

D EMAND I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT
demand fell in September by ‐0.4% year‐on‐year.) However, this modest rebound among the largest
consumers must be judged versus a very low base, as demand plummeted in September 2008. Signs
of renewed growth thus remain tentative.
Twelve Largest Oil Consumers* Gasoil Demand, Actual & F'Cast

% of World Demand Y-o-Y Change mb/d
2% 71.5% 14 26
OECD
1% 13 Non-OECD 25
0% 71.0% World
12 24
-1%
70.5% 11 23
-2%
10 22
-3% 70.0%
-4% 9 21
-5% 69.5% 8 20
Ja /07
Ja /08
7 19
Ju 08
Ju 09
M /08
M 09
Se 8
Se 9
N 07
M /08
N 08
M /09
09
l/0
l/0
n/
p/
p/
p/
/
/
ov
ov
n
ay
ay
ar
ar
1997 1999 2001 2003 2005 2007 2009

Se
* Total Oil Dem and > 1.5 m b/d

Growth continues to be largely driven by ‘other products’ in China, reflecting stimulus‐induced
infrastructure spending, and direct crude burning in Saudi Arabia for power generation – rather than
by more conventional industrial production, which is a better gauge of sustained economic activity.
Indeed, global gasoil demand – which powers the railways and trucks that underpin global industrial
activity and trade – remains subdued and should decline by 3.1% year‐on‐year in 2009, with the OECD
featuring a particularly severe contraction (‐5.7%), in sharp contrast to non‐OECD countries (‐0.3%).
Therefore, a leading indicator of a sustained economic rebound will arguably be gasoil demand,
despite the likelihood that the gasoil‐to‐GDP ratio will decline gradually (gasoil use will fall for power
generation purposes in some large non‐OECD countries, notably in Asia and the Middle East, while it
should continue to be displaced by natural gas for heating purposes in the OECD, particularly given
gas’ current price advantage).
US: Industrial Production vs. Middle Distillate World: Total Demand Q-o-Q Growth,
Demand, Y-o-Y % Chg m b/d Actual & F'Cast
4 -
2.0 OECD Non-OECD World (RHS) 2.0
2
(2) 1.5 1.5
- 1.0
(2) (4) 1.0
0.5
(4) - 0.5
Industrial (6)
(6) (0.5)
Production -
(8) (8) (1.0)
Distillate Dem and (0.5)
(10) (1.5)
(6-m rolling avg) (10) (1.0)
(12) (2.0)
Sources: Reuters, IEA
(14) (12) (2.5) (1.5)
1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10
8
08
M 9
8
9
8
9
08
8

-0
0
l-0
l-0
-0
-0
-0
-0
n-
n-
p-
ov
ay
ay
ar
ar
Ju
Ju
Ja
Ja
Se
N
M
Nonetheless, the pace of demand contraction is easing in the OECD, while demand in non‐OECD
countries is exceeding expectations. This would suggest that global demand is well on track to
feature year‐on‐year growth in 4Q09, for the first time since 2Q08. (Note: in last month’s report we
incorrectly stated that we had revised our nominal price assumption for 2009 to roughly $71/bbl, but
we actually meant 4Q09. The average for 2009 is likely to be around $60/bbl.)
Looking ahead, however, the recent price spike, if further extended, risks derailing the recovery. Not
only that, but oil demand itself would rebound much more slowly were the price rally sustained into
2010. The prospects for lower demand growth in 2010, primarily under a lower GDP scenario but also
if prices were to rise further and for longer, were highlighted in last month’s report and estimated to
represent a downside sensitivity of some 0.7 mb/d.

6 12 N OVEMBER 2009


Global Demand Growth 2008/2009/2010
thousand barrels per day
North America
Europe FSU
146
100 68
-14 22
Middle East -218

-760
561 Asia
-852 435
333
154 147
144
-1298
Latin America Africa

115 114
223 199
29 Global Demand Growth
41 (mb/d)
2008 -0.20 -0.2%
2009 -1.46 -1.7%
2010 1.35 1.6%

OECD
According to preliminary data, OECD inland deliveries (oil products supplied by refineries, pipelines and
terminals) contracted by 3.5% year‐on‐year in September, with all three regions recording losses for the
seventeenth month in a row. In OECD Europe, oil product demand tumbled by 6.8% year‐on‐year, with
all product categories bar diesel posting losses. In OECD Pacific, demand dropped by 6.1% despite a
rebound in LPG, naphtha and jet fuel/kerosene demand. By contrast, the demand contraction in OECD
North America (which includes US Territories) was marginal (‐0.2%), as strong LPG, gasoline and residual
fuel deliveries counterbalanced the continued decline in middle distillates.

OECD Demand based on Adjusted Preliminary Submissions - September 2009
Gasoline Jet/Kerosene Diesel Other Gasoil RFO Other Total Products
mb/d % pa mb/d % pa mb/d % pa mb/d % pa mb/d % pa mb/d % pa mb/d % pa
OECD North Am erica* 10.29 2.6 1.63 -3.2 3.57 -9.4 0.76 -14.7 1.04 12.3 5.11 2.82 22.39 -0.2
US50 8.77 3.2 1.43 -3.9 3.02 -11.1 0.30 -11.3 0.52 0.4 3.77 5.1 17.82 -0.1
Canada 0.73 -0.8 0.12 8.9 0.22 -5.9 0.32 -12.5 0.12 3.0 0.70 -0.5 2.20 -2.5
Mexico 0.74 -0.8 0.05 -10.6 0.28 -6.5 0.12 -6.5 0.32 49.8 0.58 -6.2 2.10 1.4
OECD Europe 2.39 -3.0 1.30 -7.3 4.61 0.5 1.78 -21.7 1.46 -12.9 3.51 -6.4 15.05 -6.8
Germany 0.49 -1.7 0.20 -4.5 0.74 5.1 0.40 -39.8 0.14 -17.4 0.59 -0.1 2.57 -9.7
United Kingdom 0.38 -1.8 0.32 -3.8 0.43 -0.9 0.15 -7.9 0.11 1.1 0.31 -0.7 1.70 -2.1
France 0.21 -4.5 0.15 -8.1 0.71 2.7 0.33 -18.3 0.09 -25.5 0.41 -5.7 1.89 -6.5
Italy 0.26 -3.3 0.08 -14.4 0.58 -0.1 0.11 -6.2 0.21 -14.6 0.30 -15.0 1.55 -7.1
Spain 0.14 -4.0 0.12 -10.5 0.50 -0.6 0.17 -4.1 0.20 -11.4 0.33 -7.4 1.47 -5.4
OECD Pacific 1.53 -1.0 0.65 1.8 1.16 -6.0 0.34 -15.2 0.55 -35.3 2.92 -0.9 7.15 -6.1
Japan 0.98 -1.9 0.39 5.9 0.52 -10.7 0.24 -17.9 0.26 -46.7 1.59 0.1 3.99 -7.9
Korea 0.18 -0.3 0.13 -4.5 0.26 -4.3 0.10 -8.0 0.25 -22.1 1.15 -2.3 2.07 -5.7
Australia 0.32 0.9 0.10 -3.5 0.32 0.5 0.00 18.5 0.04 0.5 0.17 -1.2 0.95 -0.1
OECD Total 14.21 1.2 3.58 -3.9 9.33 -4.3 2.88 -19.2 3.05 -11.7 11.54 -1.1 44.59 -3.5
* Including US territo ries

12 N OVEMBER 2009 7

m b/d OECD: Total Oil Product Demand OECD: Demand by Driver, Y-o-Y Chg
53 Transport Heating
m b/d Pow er Gen. Other
51 Total Dem .
1.0
49 0.5
-
47
(0.5)
45 (1.0)
(1.5)
43
(2.0)
Jan Apr Jul Oct Jan
(2.5)
Range 2004-2008 5-year avg
2008 2009 2007 2008 2009 2010

Revisions to August preliminary data amounted to +270 kb/d, notably from stronger‐than‐anticipated
diesel demand in North America. Yet August demand contracted by 3.8% year‐on‐year, only slightly less
than previously reported (‐4.4%). Nonetheless, OECD oil demand is slightly revised up for this year
(+80 kb/d) and next (+10 kb/d) when compared with last month’s report. Demand is thus expected to
contract by 4.3% in 2009 to 45.5 mb/d and remain virtually unchanged in 2010 (‐0.1%).

Total OECD Demand by Product
Latest m onth vs.
2008 2009 3Q08 4Q08 1Q09 2Q09 Jun 09 Jul 09 Aug 09*
Jul 09 Aug 08
LPG & Ethane 4.65 4.51 4.27 4.55 4.82 4.35 4.31 4.48 4.32 -0.16 -0.06
Naphtha 3.08 2.94 3.07 2.88 2.98 2.86 2.82 2.93 2.91 -0.02 -0.26
Motor Gasoline 14.41 14.43 14.45 14.36 14.00 14.55 14.80 14.97 14.87 -0.09 0.30
Jet & Kerosene 3.98 3.75 3.81 3.90 3.99 3.53 3.54 3.63 3.69 0.06 -0.12
Gas/Diesel Oil 13.04 12.30 12.65 13.43 13.09 11.78 12.03 11.85 11.21 -0.64 -0.88
Residual Fuel Oil 3.66 3.26 3.53 3.61 3.61 3.07 3.10 2.88 3.01 0.13 -0.41
Other Products 4.76 4.34 4.88 4.61 4.08 4.30 4.57 4.65 4.55 -0.11 -0.31
Total Products 47.59 45.53 46.67 47.34 46.58 44.44 45.16 45.39 44.55 -0.84 -1.74
* Latest o fficial OECD submissio ns (M OS)

North America
Preliminary data show that oil product demand in North America (including US Territories) fell by 0.2%
year‐on‐year in September, the 21st monthly contraction in a row. Although the decline in Canada
appears to have been significant (‐2.5%), it was marginal in the US (‐0.1%). By contrast, Mexico posted
modest growth (+1.4%).

OECD North America: OECD NA: Demand by Driver,
m b/d Total Oil Product Demand Y-o-Y Chg
27 Transport Heating
m b/d Pow er Gen. Other
26 Total Dem .
0.5
25
-
24
(0.5)
23
22 (1.0)
Jan Apr Jul Oct Jan
(1.5)
2008 2009 2007 2008 2009 2010

Revisions to August preliminary data were substantial (+480 kb/d), almost entirely due to the US, with
large upward adjustments in both gasoline and diesel offsetting much lower readings for ‘other
products’. As such, total demand in North America actually contracted by 2.1% in August, roughly half
the pace previously reported (‐4.1%). North American oil product demand is now seen averaging
8 12 N OVEMBER 2009

23.3 mb/d in 2009 (‐3.5% or ‐850 kb/d versus 2008 and +140 kb/d versus our last report), while demand
in 2010 is seen rising to 23.4 mb/d (+0.4% or +100 kb/d year‐on‐year and some 40 kb/d higher than
previously forecast).

OECD North America Demand by Product
Latest m onth vs.
2008 2009 3Q08 4Q08 1Q09 2Q09 Jun 09 Jul 09 Aug 09*
Jul 09 Aug 08
LPG & Ethane 2.72 2.66 2.47 2.66 2.88 2.51 2.43 2.63 2.65 0.03 0.02
Naphtha 0.36 0.30 0.36 0.33 0.29 0.33 0.34 0.34 0.30 -0.04 -0.02
Motor Gasoline 10.52 10.58 10.48 10.50 10.30 10.63 10.82 10.92 10.84 -0.08 0.15
Jet & Kerosene 1.77 1.66 1.79 1.64 1.66 1.62 1.63 1.76 1.68 -0.08 -0.18
Gas/Diesel Oil 5.01 4.60 4.77 5.03 4.94 4.41 4.52 4.45 4.36 -0.09 -0.34
Residual Fuel Oil 1.10 1.02 1.05 1.06 1.08 0.98 1.00 0.80 1.01 0.21 -0.01
Other Products 2.69 2.51 2.67 2.71 2.38 2.43 2.59 2.65 2.58 -0.07 -0.12
Total Products 24.17 23.32 23.58 23.93 23.52 22.92 23.33 23.54 23.42 -0.11 -0.50

Preliminary weekly data in the continental United States indicate that inland deliveries – a proxy of oil
product demand – contracted by 0.8% year‐on‐year in October. At first glance, this figure might suggest
an imminent takeoff of oil demand. However, the picture remains blurred, not least since 2008 demand
already represents a weak baseline.

kb/d US50: Total Oil Product Demand kb/d US50: Gasoil Demand
22,500 4,700
4,500
21,500
4,300
20,500 4,100
19,500 3,900
3,700
18,500
3,500
17,500 3,300
Jan Apr Jul Oct Jan Jan Apr Jul Oct Jan
Range 2004-2008 5-year avg Range 2004-2008 5-year avg
2008 2009 2008 2009

On the one hand, the EIA weekly‐to‐monthly revisions have again changed in terms of direction (down
again in August, after four months of either upward or negligible revisions), magnitude (sharply down,
almost ‐600 kb/d) and products affected (revisions were essentially concentrated in ‘other products’
rather than in distillate or gasoline demand, as in recent months). As a result, our own pre‐emptive
weekly‐to‐monthly adjustments turned out to be too pessimistic, thus leading to an upward revision of
+510 kb/d to our August preliminary estimate. Since last month our pre‐emptive, weekly‐to‐monthly
adjustments have been based on a twelve‐month average of previous changes, instead of a 6‐month
average, in order to smooth out the unexpected changes observed in recent months. However, despite
this move, as with August data, our September and October demand estimates could ultimately prove
too low. We will await the re‐emergence of a more discernible trend before making further changes to
the pre‐emptive adjustment methodology.

On the other hand, aside from the increasing difficulty in gauging monthly demand trends from
preliminary weekly data, one product category continues to consistently languish: diesel. Indeed,
demand for this product – which, as noted earlier, is strongly correlated to economic activity – has
continued to decline sharply on a yearly basis: ‐8.9% in August, despite upward revisions, and as much
as ‐11% in both September and October if weekly data are any guide.

It would thus seem that the ‘real’ economy, as opposed to the financial one, is struggling to recover,
despite the technical ending of the recession (US GDP rose by 3.5% on an annualised basis in 3Q09,
slightly above expectations). Indeed, the rebound was mostly driven by one‐off factors such as federal
12 N OVEMBER 2009 9

car purchasing incentives (‘cash‐for‐clunkers’), a temporary tax credit for homebuyers and the gradual
rebuild of depleted inventories across several industries. Since private consumption accounts for almost
three‐quarters of GDP, this could suggest that economic growth going forward may be subdued, as
consumers retreat again after their recent spending binge. It is worth noting that car sales dropped by
35% year‐on‐year in September (the ‘cash‐for‐clunkers’ programme expired early that month).
Moreover, the personal savings rate fell by 1.6 percentage points to 3.3% of disposable income in 3Q09,
a trend unlikely to continue given persistently high household debt and restricted access to credit.
Should the government withdraw its stimulus spending measures – in principle, in mid‐2010 – economic
activity could hence choke again, unless new measures were to be implemented, and cast further gloom
on an already depressed job market (unemployment rose to a 26‐year high of 10.2% in October). This
possibility in part underpinned the lower GDP and demand sensitivity contained in last month’s OMR.

Overall, the outlook for US oil demand remains largely unchanged. Oil product demand is now seen
averaging 18.8 mb/d in 2009 (‐3.7% year‐on‐year) and 18.9 mb/d in 2010 (+0.4%), some 130 kb/d and
40 kb/d higher in both years, respectively, compared to our previous forecast.

Europe
Oil product demand in Europe plummeted by
6.7% year‐on‐year in September, according to Eurozone: Industrial Production vs. Naphtha
preliminary inland data. All product categories Demand, Y-o-Y % Chg
5
bar diesel posted losses, notably naphtha,
heating oil and residual fuel oil. As in recent -
months, the persistent weakness in naphtha (5)

demand (‐20.2%) continues to confound Industrial
(10) Production
expectations of a sustained economic rebound,
as the use of this fuel tends to track industrial (15) Naphtha Dem and
(6-m rolling avg)
production closely. The fall in heating oil (20)
demand was expected, resulting from lower Sources: Reuters, IEA
(25)
deliveries in both Germany and France, given the
8
08
09
8
9
8
9
08
8
9
-0
l-0
l-0
-0
-0
-0
-0
strong pace of consumer stockbuilds during

n-
n-
p-
ov
ay
ay
ar
ar
Ju
Ju
Ja
Ja
Se
N
M
1H09. Cheaper natural gas, meanwhile,

continues to weigh on residual fuel oil use.

OECD Europe: OECD Europe: Demand by Driver,
m b/d
Total Oil Product Demand Y-o-Y Chg
16.5 Transport Heating
16.0 m b/d Pow er Gen. Other
Total Dem .
15.5 0.2
15.0 -
14.5 (0.2)
14.0 (0.4)
13.5 (0.6)
Jan Apr Jul Oct Jan
(0.8)
2008 2009 2007 2008 2009 2010

Revisions to August preliminary data were large (‐220 kb/d), affecting mostly naphtha, gasoline,
distillates and residual fuel oil demand. As such, OECD Europe oil demand contracted at a steeper year‐
on‐year pace during that month (‐8.2% instead of ‐6.7%, as previously expected). Consequently, total oil
product demand is now expected to average 14.6 mb/d in 2009 (‐4.8% or ‐740 kb/d versus 2008 and
60 kb/d lower than previously expected) and to barely rise in 2010 (+0.1%, some 50 kb/d lower when
compared to last month’s report).
10 12 N OVEMBER 2009

OECD Europe Demand by Product

Latest m onth vs.
2008 2009 3Q08 4Q08 1Q09 2Q09 Jun 09 Jul 09 Aug 09*
Jul 09 Aug 08
LPG & Ethane 1.03 0.97 0.95 0.99 1.04 0.99 1.01 0.95 0.87 -0.08 -0.03
Naphtha 1.08 0.99 1.07 0.99 1.05 0.90 0.87 0.99 0.94 -0.06 -0.24
Motor Gasoline 2.36 2.31 2.44 2.30 2.19 2.39 2.45 2.48 2.35 -0.12 -0.03
Jet & Kerosene 1.32 1.25 1.42 1.27 1.19 1.26 1.29 1.32 1.36 0.05 -0.04
Gas/Diesel Oil 6.35 6.13 6.33 6.69 6.51 5.81 5.92 5.94 5.34 -0.59 -0.60
Residual Fuel Oil 1.64 1.48 1.63 1.69 1.61 1.36 1.37 1.38 1.35 -0.03 -0.22
Other Products 1.57 1.48 1.71 1.49 1.33 1.53 1.66 1.65 1.58 -0.07 -0.08
Total Products 15.35 14.61 15.55 15.44 14.92 14.23 14.56 14.70 13.79 -0.91 -1.24

Preliminary data indicate that German oil product demand, although rising from August, sank in
September by 9.7% year‐on‐year, largely on the back of weak heating oil (‐39.8%) and residual fuel oil
deliveries (‐17.4%). Consumer heating oil stocks reached 68% of capacity by end‐September, the highest
level since October 2006, compared with 66% in August and 60% in September 2008, which suggests that
deliveries are likely to remain weak for the rest of this year. Meanwhile, cheaper natural gas supplies
continued to displace fuel oil. On a positive note, by contrast, naphtha demand was sharply revised up
for August (+55 kb/d) and recorded higher‐than‐expected growth in September (+1.5% year‐on‐year), for
the first time in a year. Although naphtha demand should post relatively strong readings in the next few
months given the extremely weak 4Q08 baseline, these improved figures suggest that German industrial
production is faring somewhat better than previously thought.

kb/d Germany: Heating Oil Demand kb/d Germany: Naphtha Demand

800 490
700
440
600
500 390
400
340
300
200 290
2008 2009 2008 2009

kb/d France: Jet Fuel & Kerosene Demand kb/d France: Diesel Demand
170 750
165
160 700
155
650
150
145 600
140
135 550
2008 2009 2008 2009

In France, oil product deliveries continued to contract in September (‐6.5% year‐on‐year), with lower
deliveries of heating oil (‐18.3%) and residual fuel oil (‐25.5%), as in Germany. By contrast, however,
naphtha demand was much weaker than previously expected, having been revised down by 80 kb/d in
August and recording another marked contraction in September (‐9.7%). As such, it would appear that
French industry is still struggling. Meanwhile, it is interesting to note that on‐road diesel demand has
been sustained since the early summer, while jet fuel/kerosene demand has sharply fallen. This provides
further evidence that during the last holiday seasons most French opted to drive to near‐by locations
rather than undertaking more expensive trips involving air travel.
12 N OVEMBER 2009 11

Pacific
Oil product demand in the Pacific fell for the fifteenth month in a row in September (‐6.1% year‐on‐year),
according to preliminary data. All product categories bar LPG, naphtha and jet fuel/kerosene recorded
losses, thus bringing to an end the modest improvement observed in August, when overall oil demand
fell marginally (‐0.1%) as Korean gains almost offset continued Japanese losses.

OECD Pacific: OECD Pacific: Demand by Driver,

m b/d
Total Oil Product Demand Y-o-Y Chg
10.0 Transport Heating
9.5 m b/d Pow er Gen. Other
Total Dem .
9.0 0.2
8.5
-
8.0
(0.2)
7.5
7.0 (0.4)
Jan Apr Jul Oct Jan
(0.6)
2008 2009 2007 2008 2009 2010

August data turned out to be 20 kb/d higher than expected, with upward adjustments in ‘other products’
deliveries barely offsetting large downward changes in middle distillate demand. Forecast OECD Pacific
demand is thus virtually unchanged, expected to average 7.6 mb/d in 2009 (‐5.9% or ‐470 kb/d on a
yearly basis and unchanged versus our last report) and 7.4 mb/d in 2010 (down by 2.2% or 170 kb/d
when compared to the previous year and +20 kb/d higher than previously estimated).

OECD Pacific Demand by Product
Latest m onth vs.
2008 2009 3Q08 4Q08 1Q09 2Q09 Jun 09 Jul 09 Aug 09*
Jul 09 Aug 08
LPG & Ethane 0.90 0.88 0.86 0.90 0.90 0.85 0.87 0.91 0.80 -0.11 -0.04
Naphtha 1.64 1.66 1.65 1.56 1.64 1.64 1.61 1.60 1.67 0.08 0.00
Motor Gasoline 1.54 1.55 1.52 1.56 1.51 1.52 1.52 1.57 1.68 0.11 0.18
Jet & Kerosene 0.89 0.84 0.60 0.99 1.15 0.66 0.62 0.55 0.64 0.09 0.09
Gas/Diesel Oil 1.68 1.57 1.55 1.70 1.64 1.56 1.59 1.47 1.51 0.04 0.06
Residual Fuel Oil 0.91 0.76 0.85 0.86 0.92 0.73 0.73 0.71 0.65 -0.06 -0.19
Other Products 0.50 0.35 0.50 0.40 0.38 0.33 0.32 0.35 0.39 0.04 -0.11
Total Products 8.07 7.59 7.54 7.97 8.14 7.30 7.27 7.16 7.34 0.18 -0.01

According to preliminary data, Japanese oil demand contracted by 7.9% year‐on‐year in September, with
all product categories bar LPG, naphtha and jet fuel/kerosene posting strong declines. Naphtha demand,
in particular, surged by 16.1%, which would tend to confirm a noticeable improvement in economic
conditions. Indeed, ethylene production recovered in September, mainly underpinned by rising exports
to China.

By contrast, residual fuel and direct crude demand, included in ‘other products’, continued to post sharp
losses (‐46.7% and ‐38.1%, respectively), reflecting the continued weakness in electricity consumption,
notably among large industrial users; less air conditioning at households and business given lower‐than‐
normal temperatures in September; and possibly some substitution by cheaper natural gas. The decline
of these fuels is bound to accelerate as nuclear’s share in power generation rises – Tokyo’s utility TEPCO
is set to restart the Kashiwazaki‐Kariwa No.7 reactor for commercial purposes by end‐2009. The 1.4 GW
unit, which had been damaged by an earthquake, had been conditionally restarted in May to undertake
several tests, but was shut down in late September in order to replace fuel rods.


kb/d Japan: Naphtha Demand kb/d Japan: Residual Fuel Oil Demand
950 750
900 650
850
550
800
450
750
700 350
650 250
2008 2009 2008 2009

The new Japanese government is reportedly mulling whether to impose mandatory targets in order to
reduce greenhouse gas emissions by 25% by 2020. It may also institute a carbon tax and provide
incentives to encourage motorists to switch to energy‐efficient hybrid cars. These moves, if
implemented, would partially offset the planned abolition of the so‐called ‘provisional’ gasoline and
diesel taxes (which have been in place almost uninterruptedly since the early 1950s in order to finance
road maintenance) in the 2010‐2011 fiscal year (April‐March). Moreover, the government may still set a
‘mileage tax’ to pay for road maintenance, following the example of several European countries (such as
Switzerland and Germany). The net effect of all these measures would arguably be a faster decline in
gasoline demand.

Non-OECD
China
Preliminary data indicate that China’s apparent demand (refinery output plus net oil product imports)
surged by 15.1% year‐on‐year in September, with all product categories posting gains. Demand growth,
however, continues effectively to be largely driven by ‘other products’, which includes mostly bitumen,
lubricants and coke (+38.5%). Naphtha demand also recorded a sharp jump (+35.2%), as petrochemical
production recovers. Both product categories are arguably directly related to the effects of the
government’s stimulus measures – 3Q09 GDP rose by 8.9% on an annual basis, according to official
statistics. Meanwhile, gasoline demand remains vigorous (+6.8%), as car sales remain buoyant (+90%
year‐on‐year in August, +78% in September and +76% in October), helped by generous government
incentives, such as halved sales taxes on vehicles with engines under 1.6 litres. (Luxury car sales, though,
have also increased strongly, by about 45% on average, indicating rising incomes in the main urban areas).

However, as this report has previously noted, Chinese end‐user demand trends are obscured by a lack of
detailed inventory data. Moreover, such data are becoming scarcer, as one of the two public sources for
domestic oil stocks (Xinhua’s China Oil, Gas and Petrochemicals newsletter) announced in its latest
edition that it has ceased publishing crude, gasoline and gasoil inventories. Given the recent rise in
international oil prices, the apparent strength in gasoline and gasoil demand could be related to
stockpiling in anticipation of domestic product price increases, as has been the case in several of the past
few months. (In fact, the actual year‐on‐year demand growth for both products is probably lower,
assuming significant destocking after the 2008 Olympics.)

Looking ahead, two issues will arguably steer Chinese oil demand trends: 1) whether and to what extent
the macroeconomic stimulus measures are maintained, and 2) whether and to what extent international
oil price changes are passed on to the consumer. Regarding the first issue, many voices inside and
outside China are warning about emerging asset bubbles, rising inflationary pressures, industrial
overcapacity and potential trade dumping issues. Some official economists have also downplayed the
‘rebalancing’ of the economy (from exports to domestic consumption). Moreover, the incentives for car

purchases are due to expire by year‐end, and it is unclear whether the small car market will be able to
withstand this and sustain strong gasoline demand growth after that.

kb/d China: Naphtha Demand kb/d China: Other Products Demand
1,100 2,000
1,000 1,800
1,600
900
1,400
800
1,200
700 1,000
600 800
2008 2009 2008 2009

With respect to the pricing issue, on 10 November the National Development and Reform Commission
increased the ‘guidance’ (wholesale) prices, for the eighth time this year (gasoline rose by 7.3%, gasoil by
8.2% and jet fuel by 6.6%). However, since 5 November, the day when the price revision window
opened, there were contradictory
China: Gasoline and Gasoil Ex-refinery Prices, 2009
reports regarding its implementation M-o-M chg
(9 or 10 November or not at all) and its 12% Gasoline
Higher sensitivity 25%
10% to int'l prices
extent (5% or 7%). The price adjustment Gasoil 20%
8%
WTI 15%
may have been delayed to account for 6%
the week‐long National Day holidays in 4% 10%
2% 5%
early October, but it may also indicate 0%
0%
that the government feels uncomfortable -2%
with current high international oil prices. -4% -5%
It must again balance the profitability of -6% -10%
Oct-09
Nov-09
Jan-09
Feb-09
Jun-09
Jul-09
Aug-09
Apr-09
May-09
Sep-09
Mar-09
state‐owned refiners against the effects

(inflationary and political) of higher
domestic prices if changes are fully passed on the end‐user. However, the price scheme has a provision to
limit the impact on consumers if prices rise further: refining margins will shrink gradually if international oil
prices exceed $80/bbl and drop to zero if oil prices reach $130/bbl; above that level, the government may
freeze domestic prices and exercise full discretion regarding ways to compensate refiners.

Therefore, China’s oil demand outlook remains highly uncertain. We have revised up our 2009 forecast
by roughly 40 kb/d in order to account for the continued strength in ‘other products’ demand, but have
left our 2010 prognosis largely unchanged. Total oil demand is thus expected to increase by 5.7% or
450 kb/d to 8.3 mb/d in 2009, and by 3.5% or 290 kb/d to 8.6 mb/d in 2010.

China: Demand by Product
(tho usand barrels per day)
D e m a nd A nnua l C hg ( k b/ d) A nnua l C hg ( %)
2008 2009 2010 2009 2010 2009 2010
LPG & Ethane 653 734 763 81 29 12.4 4.0
Naphtha 768 851 883 83 32 10.8 3.7
Motor Gasoline 1,493 1,552 1,676 59 124 3.9 8.0
Jet & Kerosene 292 330 348 38 18 12.8 5.6
Gas/Diesel Oil 2,837 2,732 2,870 -105 138 -3.7 5.0
Residual Fuel Oil 603 624 638 21 14 3.5 2.2
Other Products 1,246 1,520 1,459 274 -61 22.0 -4.0
Total Products 7,892 8,342 8,636 450 294 5.7 3.5


Other Non-OECD
India’s oil product sales – a proxy of demand – rose marginally by 0.7% year‐on‐year in September,
according to preliminary data. This relatively subdued growth was mostly due to a sharp fall in the
demand for naphtha (‐20.8%) and residual fuel oil (‐5.0%) given reported greater natural gas availability
to utilities, fertiliser producers and steel plants, as well as single‐digit increases in gasoil sales (+4.7%). In
September, the government increased the allocation of gas from Reliance Industries’ Krishna Godvari
(KG) D‐6 field, off India’s East Coast, to 50 million cubic metres per day, from 40 mcm/d before.
However, naphtha figures tend to be revised up, sometimes sharply (+75 kb/d in August). As such, the
precise extent of naphtha’s structural decline is still unclear. Meanwhile, gasoil demand eased as
drought conditions abated (demand had surged over the previous months to fuel power generators and
irrigation pumps). Gasoline demand continues to boom (+15.2% year‐on‐year), as car and two‐wheeler
sales, supported by holiday promotions and low interest rates, surged by 21% year‐on‐year in September.

kb/d India: Naphtha Demand kb/d India: Jet Fuel & Kerosene Demand
450 330
320
400
310
350 300
290
300 280
270
250
260
200 250
2008 2009 2008 2009

By contrast, jet fuel/kerosene sales (‐2.1% in September) have been depressed since mid‐2008. The
reason is to be found in the distorting impact of high state sales taxes, which average roughly 21% across
the country – only two states, Andhra Pradesh and Rajasthan, have recently lowered their sales taxes to
4%, in order to encourage the establishment of local aviation services. Paradoxically, even though pent‐
up demand for air travel is considerable, most Indian airlines are posting heavy losses by virtue of buying
jet fuel from local refiners at import parity prices and then paying state sales taxes on top. Domestic
end‐user jet fuel prices are thus effectively the most expensive in the world. Air carriers have therefore
requested that jet fuel be declared an ‘essential commodity’, eligible for a maximum tax of 4%.
However, for this to occur – or for the rest of the states to lower their tax burden substantially – the
federal government would probably need to foot the bill for lost state revenues.
% India: Jet Fuel Sales Tax, Selected States/Territories

30
Source: IO&G
25
20
15
10
0
HP
UP
Goa
J&K
Bihar
AP
Haryana
Delhi
Tamil Nadu
Punjab
Rajasthan
Gujarat
MP
Karnataka
Kerala
Chandigarh
Uttarkand
Orissa
West Bengal
Chhattisgarh
Jharkhand
Pondicherry
Average
Assam
Maharashtra

India: Demand by Product

2008 2009 2010 2009 2010 2009 2010
LPG & Ethane 407 420 437 13 17 3.2 4.0
Naphtha 310 321 288 11 -33 3.5 -10.4
Motor Gasoline 265 299 330 34 31 12.8 10.5
Jet & Kerosene 299 295 304 -3 9 -1.1 3.0
Gas/Diesel Oil 1,078 1,145 1,212 67 66 6.3 5.8
Residual Fuel Oil 395 398 402 4 3 1.0 0.8
Other Products 381 386 393 4 8 1.1 2.0
Total Products 3,134 3,264 3,365 130 101 4.1 3.1

Oil demand in Saudi Arabia jumped by an astonishing 16.4% year‐on‐year in August, driven by an
unprecedented surge in direct crude burning (accounting for about two‐thirds of ‘other products’, which
were up by 94.1%). Direct crude, used in power plants, refineries and other facilities related to upstream
production, has displaced fuel oil for the past several months (fuel oil demand has fallen by 22% year‐on‐
year on average in every month from March). Moreover, given the constrained call on OPEC crude in
2010, this pattern of strong direct crude burning and falling fuel oil use is likely to continue. As such, we
have revised up our forecast of Saudi oil demand for both this year and next. Total demand is now
expected to rise by 8.9% year‐on‐year to 2.6 mb/d in 2009, and by 4.9% to 2.8 mb/d in 2010 (+50 kb/d
and +100 kb/d, respectively, compared with our previous assessment).

Saudi Arabia: Total Oil Product Saudi Arabia: Other Products

kb/d kb/d
Demand Demand
3,200 900
750
2,700
600
450
2,200
300
1,700 150
2008 2009 2008 2009

Oil product demand in Iran has been subdued for most of this year, contracting by roughly 7% year‐on‐year
on average in every month from January. The slowing economy and political turmoil have arguably played
a large role. In addition, fuel smuggling out of the country also distorts demand patterns. The Deputy
Economy Minister was quoted saying that some 250 kb/d of gasoline, diesel and kerosene are smuggled
out to neighbouring countries, where retail prices are much higher. The trade is so entrenched that
smugglers have reportedly even built ‘export’ pipelines at some border points. Yet Iran currently imports
some 40% of its domestic gasoline requirements at great cost – in early October, the government asked the
Iranian parliament (Majlis) for an extra $3.8‐billion emergency funding to pay for gasoline imports, despite
having implemented a rationing scheme since mid‐2007.
Saudi Arabia: Demand by Product
2008 2009 2010 2009 2010 2009 2010
LPG & Ethane 587 635 693 48 58 8.3 9.1
Naphtha 100 94 114 -6 20 -5.5 21.2
Motor Gasoline 373 401 432 28 30 7.4 7.6
Jet & Kerosene 60 57 60 -3 3 -5.8 6.0
Gas/Diesel Oil 579 596 624 17 28 2.9 4.7
Residual Fuel Oil 359 291 269 -68 -21 -18.9 -7.4
Other Products 359 558 568 199 10 55.3 1.9
Total Products 2,417 2,632 2,760 215 129 8.9 4.9

kb/d Iran: Total Oil Product Demand kb/d Iran: Motor Gasoline Demand
2,000 550
1,900
500
1,800
1,700 450
1,600 400
1,500
350
1,400
1,300 300
2008 2009 2008 2009

The Iranian government faces a mounting import bill – perhaps as much as $10 billion in 2009 – and the
threat of further US sanctions aimed at curbing gasoline exports to Iran given the nuclear standoff
(although whether such sanctions would be effective is debatable, given the availability of gasoline
supplies in the region). As such, the need to raise domestic prices in order to effectively manage demand
and curb smuggling has become compelling. Indeed, a new energy bill passed in early October aims at
gradually raising gasoline (and natural gas) prices to close to international levels. By 2013, retail prices
should be at least 90% of the import cost. The first incremental increase will be implemented in principle
next March (the start of the Iranian fiscal year).

Iran: Demand by Product
2008 2009 2010 2009 2010 2009 2010
LPG & Ethane 92 85 92 -7 8 -7.9 8.9
Naphtha 42 43 44 1 2 3.2 3.7
Motor Gasoline 457 447 470 -10 23 -2.3 5.2
Jet & Kerosene 154 139 146 -15 7 -9.8 5.1
Gas/Diesel Oil 622 550 573 -72 23 -11.6 4.2
Residual Fuel Oil 410 400 418 -9 18 -2.3 4.5
Other Products 85 99 119 14 20 17.0 19.8
Total Products 1,861 1,762 1,862 -98 100 -5.3 5.7

The issue of fuel smuggling is not restricted to Iran. In Kuwait, state‐owned Kuwait Petroleum
Corporation has reportedly launched an internal investigation on a large‐scale smuggling operation.
Over the past two years, some 15‐20 Kuwaiti gate operators allegedly helped ship $2.5 million worth of
diesel to Iraq in large tanker trucks driving through the Abdali border crossing. The diesel, which
apparently came from KPC’s Shuaiba refinery and several service stations in the area, was sold in Iraq at
20 times Kuwait’s domestic price, according to local observers. Smuggling may explain the somewhat
erratic pattern of Kuwaiti gasoil demand, which surged in 2H08 and then again in recent months (+38.6%
year‐on‐year in July, the last month for which data are available).

kb/d Kuwait: Total Oil Product Demand kb/d Kuwait: Gasoil Demand
500 70
450 60
50
400
40
350
30
300
20
250 10
200 -
2008 2009 2008 2009


S UPPLY I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT
SUPPLY

Summary
• Global oil supply in October rose by 635 kb/d to 85.6 mb/d, with both non‐OPEC and OPEC supplies
rising month‐on‐month. Global production is still down 850 kb/d from levels of a year ago, with a
steep fall in OPEC supplies partially offset by higher non‐OPEC output.
• Non‐OPEC supply rose 380 kb/d in October, to 51.4 mb/d as North Sea maintenance ended. The
absence of any hurricanes in the US Gulf of Mexico until November also contributed to higher‐than‐
expected output. A more optimistic outlook in the US GOM, Mexico, Norway, Russia and ‘Other
Biofuels’ contributed to upward revisions of 130 kb/d and 350 kb/d for 2009 and 2010 respectively.
Non‐OPEC output in 2009 is now forecast to average 51.1 mb/d, rising to 51.9 mb/d in 2010.
• Tropical Storm Ida made landfall near Mobile in Alabama just before going to press. The storm had
previously slowed from hurricane status and early reports indicate little to no damage. However, as a
precautionary measure, 560 kb/d or around 43% of Gulf of Mexico crude output was shut‐in by
10 November, according to the US Minerals Management Service (MMS), in addition to 1.957 bcf/d or
28% of regional natural gas production.
• OPEC crude production rose by 110 kb/d to 29.0 mb/d in October, the highest level since January

2009. Crude production by the 11 members with output targets rose by 150 kb/d to 26.5 mb/d. OPEC‐11
is now producing about 1.6 mb/d over the group’s 24.845 mb/d output target. Relative to targeted
output cuts, the group’s compliance rate slipped to around 61% compared with 64% in September.
• The call on ‘OPEC crude and stock change’ for 4Q09 is revised up 200 kb/d, to 28.6 mb/d on higher
forecast demand and lower OPEC NGLs. A slower‐than‐forecast ramp up in new NGL output in Saudi
Arabia is largely behind this month’s revision to OPEC NGLs, which were lowered 200 kb/d to
5.0 mb/d for 2009 and by 300 kb/d, to 5.8 mb/d for 2010.

m b/d OPEC and Non-OPEC Oil Supply
m b/d OPEC and Non-OPEC Oil Supply
Year-on-Year Change (OPEC Current Membership)
3.0
60 33
2.0
58 32
1.0 56 31
0.0 54
-1.0 30
52
-2.0 50 29
-3.0 48 28
-4.0 46 27
Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Jul 10
OPEC Crude Non-OPEC Non-OPEC OPEC NGLs
OPEC NGLs Total Supply OPEC Crude - RS

All world oil supply figures for October discussed in this report are IEA estimates. Estimates for OPEC
countries, Alaska, Indonesia and Russia are supported by preliminary October supply data.

Note: Random events present downside risk to the non‐OPEC production forecast contained in this report.
These events can include accidents, unplanned or unannounced maintenance, technical problems, labour strikes,
political unrest, guerrilla activity, wars and weather‐related supply losses. Specific allowance has been made in
the forecast for scheduled maintenance in all regions and for typical seasonal supply outages (including
hurricane‐related stoppages) in North America. In addition, from July 2007, a nationally allocated (but not field‐
specific) reliability adjustment has also been applied for the non‐OPEC forecast to reflect a historical tendency
for unexpected events to reduce actual supply compared with the initial forecast. This totals ‒410 kb/d for non‐
OPEC as a whole, with downward adjustments focused in the OECD.

I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT S UPPLY
OPEC Crude Oil Supply

OPEC crude production rose by 110 kb/d to 29.0 mb/d in October, its highest level since January 2009.
Production by the 12 member countries has steadily edged higher over the year from a low of 28.1 mb/d
in February.

Crude oil production by the 11 members with output targets, which excludes Iraq, rose by 150 kb/d, to
26.5 mb/d in October. Higher production month‐on‐month was led by Nigeria followed by Angola,
Kuwait, Algeria, Qatar and Saudi Arabia. OPEC‐11 is now producing about 1.6 mb/d over the group’s
24.845 mb/d output target. Relative to targeted output cuts, the group’s compliance rate slipped to
around 61% compared with 64% in September. OPEC’s effective spare capacity is estimated at 5.4 mb/d.

OPEC output could edge higher in the last two months of the year as Nigeria presses ahead with
restoring damaged oil infrastructure following the unexpected success so far of the country’s amnesty
programme for militant groups.

Several OPEC countries, especially in the Gulf, are easing up on volume cuts for some buyers, especially
in Asia. While OPEC price hawks talk of the need to reduce output further due to the persistently high
level of stocks in the market, there seems to be a quasi‐consensus among others that an increase in
output targets may be in the offing at the next meeting if prices move significantly above current levels.
Saudi Arabia has unofficially branded $70‐75/bbl as an ideal target price for the producer group—but
markets have moved above this level in late October and early November. OPEC members, especially in
the Middle East Gulf, are worried that higher oil prices could threaten the global economic recovery and
further strain relationships with consuming nations ahead of climate change talks in Copenhagen.
OPEC’s next scheduled meeting will take place in Angola on 22 December.

Quarterly Call on OPEC Crude + Stock OPEC Crude Oil Production
m b/d
mb/d
Change 33
32 32
31
30
30
28 29
26 28
27
24
Jan Mar May Jul Sep Nov Jan
1Q 2Q 3Q 4Q
2006 2007
2008 2009 2010
2008 2009
Entire series based on OPEC Composition as of January 2009 Entire series based o n OP EC Co mpo sitio n as o f January 2009
onwards (including Angola & Ecuador & excluding Indonesia) o nwards (including A ngo la & Ecuado r & excluding Indo nesia)

Saudi Arabia’s October output was assessed largely unchanged at 8.2 mb/d following an upward revision
to the September estimate. September Saudi output was increased from 8.15 mb/d to 8.19 mb/d
following the country’s data submission to JODI. Above‐target output of some 150 kb/d continues to be
burned at domestic power plants despite the end of the peak summer demand cooling season when
extra crude burn at power and water desalination plants is needed to meet stronger overall demand.
Aramco’s decision to substitute Arab Light for crude burn instead of fuel oil looks set to continue given
new environmental regulations calling for cleaning burner feedstock (see Is It Always The Darkest in the
Hour Just Before Dawn in the Refining section.).

While Saudi Arabia’s above‐target output hitherto appears to have been earmarked for domestic use,
reports that several customers in Asia will receive full contract volumes for the first time in a year may
signal a further easing of output curbs. The higher volumes on offer are for light grades, no doubt
reflecting the start‐up of new production. The bulk of Saudi export cuts since last September appear to
be medium and heavy crudes. Saudi Arabia accounted for almost 50% of OPEC’s total cuts in October.

Kuwait and the UAE also increased output in October but compliance with their output targets is still
above 90%. Kuwaiti production rose 40 kb/d, to 2.3 mb/d while the UAE increased output by about half
that amount also, to 2.3 mb/d.

Iran’s oil production in October was down by 50 kb/d, to around 3.7 mb/d. Tensions between the global
community and Iran over the latter’s nuclear enrichment facilities continue but so far the impact on the
market has been muted. The US Congress is moving forward with plans to tighten sanctions on Iran, but
the new legislation targets companies that sell refined products to Iran‐a net importer of roughly
120 kb/d of gasoline. However, sanctions on Iran by the international community via the UN are likely to
be blocked by China and Russia.

OPEC Crude Production

(million barrels per day)
Percent
Sustainable Spare Capacity
Aug 2009 Sep 2009 Oct 2009 OPEC Compliance
Production vs Oct 2009
Supply Supply Supply Target Cuts with Volume
Capacity1 Supply
Cuts
Algeria 1.22 1.22 1.24 1.40 0.16 0.200 65%
Angola 1.79 1.86 1.90 2.10 0.19 0.244 0%
Ecuador 0.46 0.46 0.46 0.50 0.04 0.067 57%
Iran 3.80 3.70 3.65 4.00 0.35 0.562 28%
Kuwait2 2.24 2.23 2.27 2.65 0.38 0.374 91%
Libya 1.55 1.55 1.55 1.77 0.22 0.252 60%
Nigeria3 1.74 1.85 1.90 2.60 0.70 0.319 25%
Qatar 0.76 0.76 0.78 0.90 0.12 0.122 66%
Saudi Arabia2 8.20 8.19 8.20 11.60 3.40 1.318 95%
UAE 2.27 2.27 2.29 2.85 0.56 0.379 95%
Venezuela4 2.21 2.24 2.24 2.40 0.16 0.364 36%
OPEC-11 26.24 26.33 26.48 32.77 6.28 4.201 61%
Iraq 2.56 2.51 2.47 2.60 0.13
Total OPEC 28.80 28.84 28.95 35.37 6.41
(excluding Iraq, Nigeria, Venezuela 5.42)

1 Capacity levels can be reached within 30 days and sustained for 90 days.
2 Includes half of Neutral Zone production.
3 Nigeria excludes some 0.5 mb/d of shut-in capacity.
4 Includes upgraded Orinoco extra-heavy oil assumed at 480 kb/d in October.

Iraqi output fell by about 40 kb/d in October, to 2.5 mb/d, largely due to lower output in the northern
region. Total exports in October were down by 90 kb/d to just under 1.9 mb/d in October. Domestic
crude use at refineries and for power use is estimated at 600 kb/d compared with 550 kb/d last month.

Exports via the southern Basrah terminals were up by a small 30 kb/d in October, at about 1.5 mb/d. By
contrast, exports of Kirkuk crude fell by around 110 kb/d to 375 kb/d—the lowest since last November.
Exports from the northern fields were disrupted for a week following insurgency attacks on the pipeline
running from Kirkuk to the Turkish Ceyhan port on the Mediterranean.

Northern exports via the Kirkuk‐Ceyhan pipeline were averaging around 500 kb/d before the start‐up of
new production from the Tawke and Taq Taq fields in June. The two fields were producing a combined
100 kb/d this past summer but the operators have opted to shut‐in production until payment issues over
the export volumes are resolved. Iraqi state marketer SOMO handles collection of all oil revenues but
refuses to make payments to the companies for this new northern production on the grounds that the
contracts signed with the Kurdish Regional Government (KRG) are illegal. The stand‐off between the
companies and Baghdad is not expected to be resolved until after the country’s elections in January and
until a new petroleum law is adopted, which is unlikely until mid‐2010 at the earliest.

SOMO is apparently still spiking fuel oil into crude exports to maintain higher levels of exports but the quality
has improved following the withdrawal of lower quality Tawke and Taq Taq crude from the Kirkuk blend. The
27°API Tawke stream had earlier lowered the quality of the normally lighter 34.5‐35° API Kirkuk export grade.

Angolan output was up by 40 kb/d, to 1.9 mb/d in October as output from the start‐up of the new
Tombua Landana and Mafumeira Norte fields continued to slowly ramp up. Both fields are not expected
to reach their peak capacity until sometime in 2011, to 100 kb/d and 35 kb/d respectively.
In October, Nigerian production rose to its highest level this year following new peace agreements between
rebel groups and the government. Output rose 50 kb/d, to 1.9 mb/d in October. As a result, Nigeria’s
compliance with the country’s targeted cuts slipped to just 25% in October from around 40% in September.
After dropping to the lowest levels in more than two decades this summer, Nigerian production may
steadily increase following the success of the government’s amnesty programme for militants. The
ceasefire has already enabled IOCs to pick up the pace on repair work to damaged oil infrastructure.
Operating companies have been unable to assess the damage to operations in recent years given persistent
attacks in the sprawling Niger Delta region. Plans are being developed now by companies to do a survey of
the infrastructure but any significant increase in production is not expected to start until next year. The
country’s largest operator, Royal Dutch Shell, has said it has restored around 100 kb/d of shut‐in production
in recent months and has plans on the drawing board to start work repairing the rebel‐damaged Trans‐
Escravos, Trans‐Ramos and Trans‐Forcados pipelines. Shell said around 800 kb/d remains offline.

OPEC NGLs
OPEC NGLs were revised down by 200 kb/d, to 5.0 mb/d for 2009 and by 300 kb/d, to 5.8 mb/d for 2010.
A slower‐than‐forecast ramp up in new NGL output in Saudi Arabia is largely behind this month’s revision
to OPEC NGLs.
Partial start‐up of Saudi Aramco's long‐delayed gas processing plant at Khursaniyah is expected
sometime this month but initial volumes are expected to be modest. The gas plant project has been
delayed for more than year after the Khursaniyah oil field started production. The facility will have the
capacity to produce 560 million cf/d of gas and 280 kb/d of NGLs and ethane. Pre‐commissioning of
Train 1 is expected this month but Trains 2 and 3 are not slated for start‐up until the end of 1Q10.

Non-OPEC Overview
Total non‐OPEC supply rose by 380 kb/d in October, to 51.4 mb/d, as seasonal North Sea maintenance,
which had been heavier than usual this year, came to an end. The absence of any hurricane‐related
shut‐in volumes in the US Gulf of Mexico until November also contributed to higher‐than‐forecast
production, though at the time of writing, Tropical Storm Ida had caused precautionary crude production
shut‐ins of around 560 kb/d.
mb/d Non-OPEC Supply: Year-on-Year mb/d Total Non-OPEC Supply - y-o-y chg
Change 1.4
1.25 1.2
1.00 1.0
0.75 0.8
0.50 0.6
0.25 0.4
0.00 0.2
-0.25 0.0
1Q09 3Q09 1Q10 3Q10 -0.2
Crude NGLs/Non-Conv -0.4
Global Biofuels Processing Gains 2000 2002 2004 2006 2008 2010
Total
More generally, higher‐than‐anticipated September production in Norway, Mexico, Russian NGLs,
Kazakhstan, Brazil and ‘Other Biofuels’ led to upward revisions to forecast. Total 2009 production is now
forecast to average 51.1 mb/d and is set to rise to 51.9 mb/d in 2010, following respective upward
revisions of 130 kb/d and 350 kb/d.


Minimal Impact of Tropical Storm Ida on US Gulf of Mexico Upstream Operations
Just before going to press, Tropical Storm Ida made landfall near Mobile in Alabama. The storm had
previously slowed from hurricane status and early reports indicated nothing like as devastating an impact as
Hurricanes Gustav & Ike in the late summer of 2008. Ultimately, Ida veered to the east, thereby avoiding
much of the offshore oil production areas.
Nonetheless, the US Minerals Management Service (MMS) reported that as a precautionary measure around
560 kb/d of oil production capacity had been shut in on 10 November, representing around 43% of total US
GOM output. In addition, 1.957 bcf/d of natural gas production was shut in, around 28% of regional capacity.
A comprehensive assessment of the storm’s impact is expected now the storm has passed. But it is worth
stressing two points. Firstly, that global spare upstream capacity is high, as are stock levels. Secondly, initial
reports indicate no damage and some companies are already in the process of restarting production. A
rough calculation shows that even assuming the currently shut‐in volumes are only fully back online within a
week, that would only amount to around 80 kb/d being shaved off monthly US production. This is less than
the 180 kb/d we had previously estimated as likely to be shut‐in, simply based on the five‐year average.

Much of this incremental volume is set to come onstream towards the end of 2010, such as phased
expansions at Azerbaijan’s ACG complex and incremental volumes of Canadian conventional crude,
Kazakhstan and offshore Brazil, where the Tupi and Parque das Conchas fields, among others, will be
ramping up production. However, over 50% of this 1 mb/d increase in total non‐OPEC supply from 3Q10
to 4Q10 is due to output returning from seasonal maintenance – typically heaviest in the third quarter in
many parts of the world, such as the North Sea, but also assumed for Canadian crude and Kazakhstan. In
the latter, due to the Tengiz field’s size and complexity, maintenance can shut‐in production anywhere
between 20‐30% for a period in the third quarter. This year’s seasonal dip was actually partly masked
due to some incremental capacity coming online around the same time.

Non-OPEC Supply
1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 3Q10 4Q10 2010
North America 14.2 14.0 13.6 13.8 13.9 14.2 13.9 14.1 14.2 14.1 14.4 14.1 13.9 14.3 14.2
Europe 4.9 4.8 4.5 4.8 4.8 4.9 4.5 4.2 4.3 4.5 4.3 4.0 3.9 4.1 4.1
Pacific 0.6 0.7 0.7 0.7 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8
Total OECD 19.7 19.5 18.8 19.3 19.3 19.7 19.0 19.0 19.2 19.2 19.4 18.9 18.6 19.2 19.0
Former USSR 12.8 12.9 12.7 12.7 12.8 12.9 13.1 13.2 13.4 13.2 13.5 13.7 13.5 13.7 13.6
Europe 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
China 3.8 3.8 3.8 3.8 3.8 3.7 3.8 3.8 4.0 3.8 4.0 4.0 4.1 4.1 4.1
Other Asia 3.7 3.6 3.7 3.7 3.7 3.6 3.6 3.6 3.7 3.6 3.7 3.7 3.8 3.8 3.7
Latin America 4.1 4.1 4.2 4.2 4.1 4.3 4.3 4.3 4.4 4.3 4.5 4.6 4.7 4.8 4.6
Middle East 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6
Africa 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5
Total Non-OECD 28.7 28.7 28.6 28.7 28.7 28.9 29.2 29.3 29.6 29.2 30.0 30.2 30.2 30.6 30.2
Processing Gains 2.2 2.2 2.3 2.3 2.2 2.3 2.3 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2
Other Biofuels 0.3 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Total Non-OPEC 51.0 50.8 50.1 50.7 50.6 51.2 50.8 51.0 51.5 51.1 52.0 51.7 51.5 52.5 51.9
Annual Chg (mb/d) -0.2 -0.1 -0.3 -0.2 -0.2 0.3 0.0 0.9 0.8 0.5 0.8 0.9 0.4 0.9 0.8
Changes from last OMR (mb/d) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.3 0.1 0.3 0.3 0.3 0.5 0.4

Biofuels Update
Global biofuels production was revised down slightly for 2009 and 2010, by 5 kb/d and 10 kb/d, to
1.6 mb/d and 1.7 mb/d, respectively. (Note, these production figures are volumetric, whereas in the
recently published IEA World Energy Outlook, biofuels volumes are reported on an energy equivalent basis
to fossil fuels). However, minimal changes to the headline number mask more significant underlying
revisions to the US, Europe and Brazil. US ethanol producers continued to benefit from favourable corn
and natural gas prices, which have translated into steadily improving margins. August production data

from the EIA put US ethanol production at 727 kb/d, largely unchanged from July. This output level
suggests capacity utilisation rates around 93%, much improved from the 80‐85% utilisation rates seen
during most of 1H09. We have revised up our 2H09 production expectations by 10 kb/d and our overall
2009 production to 685 kb/d, in line with the US government’s mandated usage volume while keeping
2010 relatively unchanged at 770 kb/d.

US Ethanol Margin vs Production Jan

$/galNov/07
Dec/07
Jan/08
Feb/08
Mar/08
Apr/08
May/08
Jun/08
Jul/08
Aug/08
Sep/08
Oct/08
Nov/08
Dec/08
Jan/09
Feb/09
Mar/09
Apr/09
May/09
Jun/09
Jul/09
Aug/09
Sep/09
Oct/09
Nov/09 08=100
Ethanol Feedstock vs Oil Prices
k b/d
0.80 750 225
700 200
0.60 175
650
0.40 150
600
125
0.20 550 100
500 75
0.00
450 50
-0.20 400 25
Nov-07 May-08 Nov-08 May-09 Nov-09 Jan 08 Jun 08 Nov 08 Apr 09 Sep 09
Intercont Exch Sugar Chicago Corn
Corn Ethanol Margin Production Europe Wheat NY Harbor RBOB

European ethanol production, which falls under the ‘Other Biofuels’ category (i.e. all biofuels excepting
US and Brazilian ethanol, which are included in those countries’ totals) in our balance, has also
benefitted from stronger margins. Favourable wheat feedstock prices have lifted monthly output and
have prompted an upward revision of 10 kb/d to 2H09 production and 15 kb/d to 2010 production. By
contrast, short‐term Brazilian ethanol production expectations continue to recede. Production is revised
down by 25 kb/d for 2009 to 480 kb/d as rains have hampered the harvest in the Centre‐South region
and high sugar prices have encouraged sugar production at the expense of ethanol. Rising domestic
ethanol prices may also start curtailing ethanol demand as the price discount to gasoline is eroded in
some areas. Slower domestic consumption, tight sugar markets and reduced expectations for new mills
have also lowered 2010 production by 45 kb/d, to 510 kb/d.

OECD
North America
US – October Alaska actual, others estimated: Total US oil production in October rose marginally to
8.1 mb/d as output in the US Gulf of Mexico (GOM) grew and Alaskan production returned from summer
maintenance. In the latter, production at Cook Inlet rose to more normal output levels, following several
months of shut‐ins due to volcano activity in the plant’s vicinity. In the US GOM, once again the absence
of any hurricane‐affected shut‐ins in October led to an upward revision. Typically, the hurricane season
ends on 30 November, although in early November, Tropical Storm Ida prompted some production shut‐
ins (see Minimal Impact of Tropical Storm Ida on US Gulf of Mexico Upstream Operations). Lastly, some
revised historical data for natural gas liquids (NGL) prompted a small lift in the baseline. Total US oil
production is revised up by 60 kb/d in 2009 and is now expected to average 8.0 mb/d. 2010 was revised
up by 50 kb/d to 8.2 mb/d, with anticipated strong growth in the US GOM.
mb/d Alaskan Crude Supply mb/d US GOM Crude Supply
0.80 2.00
1.50
0.70
1.00
0.60
0.50
0.50 0.00
Jan Mar May Jul Sep Nov Jan Jan Mar May Jul Sep Nov Jan
2007 2008 2007 2008
2009 Forecast 2009 2009 Forecast 2009
2010 Forecast 2010 Forecast


Going to California: Shrinking PADD 5 Output Redirects Crude Flows
This summer saw crude volumes through the Trans‐Alaska Pipeline System (TAPS) fall to a record low below
600 kb/d, leading to worries about its economic and technical sustainability. The pipeline, which takes
output from the giant Prudhoe Bay oil field on Alaska’s North Slope to the Valdez export terminal in the
south of the state, used to pump as much as 2 mb/d at its peak 20 years ago. Besides economics, the fear is
that even lower volumes could lead to more frequent and damaging outages – a major issue for oil
companies lacking alternative export routes.
Alaskan authorities are mulling technical solutions – fewer pumping stations is one suggestion. But another
answer would lie in increasing Alaskan output. September data put North Slope crude production at
650 kb/d and falling – output was over 1 mb/d in 1999 and at around 2 mb/d ten years earlier.
But long‐standing hopes to produce more crude in northern Alaska depend on changes to legislation. Three
large areas in Alaska lie unexplored and undeveloped – the National Petroleum Reserve in Alaska (NPR‐A),
reserved for the US Navy’s use since 1923, the Arctic National Wildlife Refuge (ANWR) and federal waters
offshore the north coast. All have been surveyed to some extent, generating estimates of billions of barrels
of recoverable crude. Another boost for the pipeline could be natural gas liquids (NGL) from new gas fields
being developed – e.g. Exxon’s Point Thompson, though this will likely only start producing in 2014, and
overall NGL volumes are unlikely to compensate for declining crude output.
mb/d Alaskan Crude Production US Crude Imports by Source

1.8 (Jan 2001=100; 3-mth rolling avg)
1.6 160
1.4 140
1.2 120
1.0 100
0.8 80
0.6 60
0.4 40
Source: EIA
0.2 20
0.0 2001 2003 2005 2007 2009
1994 1999 2004 2009 2014 Canada Saudi Arabia
Mexico Venezuela
The previous federal administration chose to loosen restrictions on the development of Alaskan Arctic
waters, as well as the Outer Continental Shelf (OCS) – both long out of bounds for oil producers due to
environmental concerns. In principle the Obama administration favours opening up these areas – the US
Department of the Interior estimates that around 85 billion barrels of oil and 12 trillion cubic metres of gas
are yet to be discovered there – but the debate on this issue is highly polarised. For instance, a US court
recently cancelled, on environmental grounds, some licences for blocks offshore Alaska which had been
awarded under the Bush administration.
Lower Alaskan crude output has implications beyond state boundaries. Californian refiners, which have long
relied on Alaskan crude to top up declining local output, are having to search further afield. Crude from
Latin American producers used to flow north to the Golden State. But competition from East Asia, notably
China, is drawing some of this output across the Pacific. One change in oil flows to result from this is the
reversal of the Panama Canal pipeline. Originally built to accommodate Alaskan crude heading to the US
Gulf of Mexico refining cluster, it was recently converted to bring Atlantic Basin or even more remote crude
to the Pacific, including California. First shipments of Colombian crude were pumped in August.
A likely option in the face of declining Alaskan production will be to hike crude imports from Canada. This
northern neighbour has overtaken competitors Saudi Arabia and Mexico in recent years to become the US’s
largest source of crude oil, benefiting on proximity and energy security grounds as production has increased.
US Midwestern refineries have long taken heavy sour Canadian crude, and pipelines to bring the crude all
the way to the US Gulf are under construction. From 2010, Enbridge’s Alberta Clipper pipeline, which will
run 1,600 km from Hardisty, Alberta to Superior, Wisconsin, will add 450 kb/d of Canadian crude, later to be
expanded to 800 kb/d. With some other changes to the US pipeline network, these barrels will eventually
be able to flow south to the US Gulf Coast. Freight and refining economics permitting, some of these may
even make it to California.

Canada – Newfoundland – September actual, others August actual: August oil production in Canada
was unchanged at 3.1 mb/d, but was adjusted down for September (‐70 kb/d) on lower‐than‐expected
output at the Terra Nova and White Rose fields offshore Newfoundland. Synthetic crude producer Suncor
reported a fire at one of its upgraders in mid‐October, cutting an assumed 50 kb/d of average monthly
output. Total Canadian output is forecast to average 3.1 mb/d in 2009, growing to 3.2 mb/d in 2010.

mb/d Canada Total Oil Supply mb/d Mexico Total Oil Supply
3.60 3.70
3.50
3.40
3.30
3.20 3.10
2.90
3.00
2.70
2.80 2.50
2007 2008 2007 2008

Mexico – September actual: In September, oil production in Mexico rose by 50 kb/d to 3.0 mb/d, as
decline at the large Cantarell field slowed, at least temporarily, averaging 575 kb/d, and output at the Ku‐
Maloob‐Zaap (KMZ) complex jumped by 50 kb/d to a new record high of 825 kb/d. Production was also
higher than forecast due to the absence of any hurricane impact. Storms did close some export
terminals on the Gulf of Mexico coast in late October and early November, a common occurrence, but no
shut‐in production volumes were reported.

In early October, the recently‐formed National Hydrocarbons Commission recommended a full review of
development plans at the large onshore Chicontepec field, leading to speculation that production might
be halted. Pemex statements have since affirmed that operations will continue, but it does appear likely
that a full review of costs, service contracts and overall strategy at Chicontepec will take place. Criticism
focuses on the fact that, despite large investments, production at Chicontepec still only hovers around
30 kb/d, despite Pemex staking its hopes on Chicontepec’s growth offsetting the sharp decline in
Cantarell’s output. This report cautiously assumes only a marginal increase in Chicontepec output in
2010. Meanwhile, better September performance elsewhere has led to an upward revision of 15 kb/d
and 30 kb/d for 2009 and 2010 respectively. However, production is nonetheless forecast to decline
from 3.0 mb/d this year to 2.8 mb/d in 2010, weighed down by Cantarell’s decline.

North Sea
Norway – August actual, September provisional: Total Norwegian oil supply dipped in August and
September month‐on‐month, but was expected to rise again in October, as maintenance ends.
Production was however more robust than forecast in August and September, leading to an overall
upward revision of 35 kb/d and 50 kb/d for 2009 and 2010 respectively. Average output is expected at
2.3 mb/d in 2009 and 2.1 mb/d in 2010.

Oil field maintenance took place at the Vigdis, Snorre and Snoehvit fields amongst others, the last of
which came back onstream in October just to be halted again briefly due to technical problems. On the
other hand, there was a boost in output at the Varg field in August (and now confirmed for July too), as
the Rev tie‐back ramps up production. Meanwhile, problems at the Valhall group of fields continue.
With a combined output of around 50 kb/d as recently as the beginning of the year, July and August saw
production come to a nearly total halt.


Looking ahead, the Norwegian government announced that total capital expenditure in the oil industry,
including exploration, will be just under $24 billion in 2009, up 7% from 2008, though much of the higher
investment is expected to be offset by higher costs. On average, forecast costs at ten monitored projects
have risen by 23% over projections made in 2005‐07. Regarding the capex spent on exploration, much is
focused on exploration in mature production areas, where development of even relatively small projects
can be profitable by tying them back to existing infrastructure. Meanwhile, the government hopes to
publish a white paper on its petroleum policy next year, including plans for the environmentally sensitive
Lofoten and Vesteralen archipelagos, where a drilling moratorium until 2013 was recently announced.

Pacific
Australia – August actual: Australian production was steady in August at 555 kb/d, though this and
previous months were revised down marginally. An oil spill at the Montara development had been
underway since mid‐August. On 1 November, an attempt to halt the leak caused a fire on a platform and
on a drilling rig. This is expected to have set back the start‐up of the 40 kb/d Montara complex by
around one year until 3Q10. Offsetting this, the start‐up of production at the Pyrenees field was brought
forward to 1Q10 from later next year, with the Van Gogh field now also expected to see first production
volumes in 2010. Total Australian oil production is forecast to average 550 kb/d in 2009 and to rise
sharply to 660 kb/d as the above‐mentioned fields start up.

Former Soviet Union (FSU)
Russia – September actual, October provisional: September crude production was adjusted up by
40 kb/d on higher output at the Sakhalin projects. However, in October, crude oil production in Russia
fell for the first time since May, to 9.8 mb/d. Partly disaggregated data continue to support the case that
the main reason for recent growth was a group of new fields including the vast Vankor project, where
output rose by 20 kb/d each month in September and October and is currently producing at around
170 kb/d. On the NGL front, assumed Gazprom condensate production in October was also 25 kb/d
higher than previously forecast. In addition, an ongoing reappraisal of NGL output from the processing
of associated gas, which is not included in the Russian Energy Ministry’s reported crude oil and
condensate production figures, has led to an upward revision of the total NGL baseline figure by 40 kb/d
for 2010. Total Russian oil production is forecast to average 10.1 mb/d in 2009, only marginally higher
than in last month’s report, while forecast 2010 output is raised by 60 kb/d to 10.3 mb/d.

FSU Net Exports of Crude & Petroleum Products
Latest month vs.
2007 2008 3Q2008 4Q2008 1Q2009 2Q2009 Jul 09 Aug 09 Sep 09
Aug 09 Sep 08
Crude
Black Sea 2.18 2.05 1.97 2.04 2.30 2.23 2.06 2.07 2.19 0.12 0.33
Baltic 1.59 1.46 1.40 1.47 1.57 1.66 1.55 1.67 1.61 -0.06 0.14
Arctic/FarEast 0.32 0.30 0.29 0.37 0.46 0.45 0.44 0.47 0.54 0.07 0.24
BTC 0.55 0.67 0.64 0.57 0.74 0.80 0.87 0.81 0.79 -0.02 0.07
Crude Seaborne 4.63 4.48 4.30 4.45 5.07 5.14 4.91 5.01 5.13 0.12 0.79
Druzhba Pipeline 1.13 1.08 1.03 1.09 1.14 1.12 1.06 1.07 1.13 0.06 0.08
Other Routes 0.44 0.42 0.46 0.40 0.40 0.40 0.37 0.46 0.38 -0.08 -0.12
Total Crude Exports 6.20 5.98 5.79 5.94 6.61 6.66 6.35 6.54 6.64 0.10 0.75
Of Which: Transneft 4.27 3.99 3.87 3.96 4.22 4.27 3.95 4.15 4.24 0.09 0.35
Products
Fuel oil 1.10 1.09 1.04 1.04 0.96 1.16 1.23 1.10 1.16 0.07 0.18
Gasoil 0.95 0.94 0.79 0.92 1.10 0.95 1.08 0.95 0.88 -0.07 0.14
Other Products 0.60 0.59 0.55 0.56 0.73 0.79 0.69 0.63 0.57 -0.06 0.05
Total Product 2.65 2.63 2.38 2.52 2.78 2.89 3.00 2.67 2.61 -0.06 0.37
Total Exports 8.85 8.61 8.17 8.46 9.39 9.55 9.35 9.21 9.25 0.04 1.12
Imports 0.04 0.04 0.05 0.03 0.04 0.05 0.04 0.04 0.04 0.00 -0.03
Net Exports 8.82 8.57 8.12 8.43 9.35 9.50 9.31 9.17 9.22 0.04 1.15
Sources: Petro-Logistics, IEA estimates
Note: Transneft data has been revised to exclude Russian CPC volumes.

September FSU net exports rose 1.2 mb/d year‐on‐year, as Varandey and Sakhalin shipments boosted
Arctic and Far East exports, while more Caspian crude left Black Sea ports compared with last year when
shipments dropped sharply due to problems at Azerbaijan’s ACG field complex. Month‐on‐month, FSU
net oil exports reached 9.2 mb/d, up 0.5% from August. Product flows contracted by 2.2% as some
Russian refineries carried out maintenance of secondary units. A rise in fuel oil volumes partially offset
the drop of gasoil and other product deliveries. In Ukraine, bad weather caused a power cut that halted
flows via the southern leg of the Druzhba, but only for one day. A 60 kb/d drop in loadings from the
Baltic port of Primorsk reflected maintenance carried out on the Ukhta‐Yaroslavl pipeline. BTC volumes
fell to 790 kb/d on maintenance at the ACG complex in Azerbaijan.

Crude oil export volumes from Odessa were curtailed in September and ceased completely in October.
The port is currently used for imports of crude oil loaded in Tuapse and Ceyhan to feed the Kremenchug
refinery in central Ukraine (see Squeezing Central Europe? in report dated 9 October 2009). But
preliminary data show that exports from neighbouring Pivdenne port rocketed to almost 250 kb/d in
October. The Brody‐Odessa line supplying the port with crude oil reached its maximum capacity, also
carrying Kazakh crude redirected from Novorossiysk due to maintenance at the pipeline servicing the
latter. October also saw Kazakh volumes replace Russian crude exported to China via the Atasu‐
Alashankou line, after all three sections of the Kazakhstan‐China oil pipeline were connected.

Russian loading schedules for November revealed shipments are set to fall from all ports except
Novorossiysk. The crude oil export duty is set at $231.2/mt ($31.5/bbl) from 1 November, down 3.9%
from October’s $240.7/mt ($32.8/bbl). Light and heavy oil products carry an export tax of $168.1/mt
and $90.5/mt, respectively.

Other Non-OPEC
China – September actual: September oil production in China was around 120 kb/d lower than forecast,
at 3.8 mb/d, and dipped slightly from August. Notably, offshore production was around 40 kb/d lower
than anticipated, while output at China’s largest field, Daqing, came in around 20 kb/d below forecast.
On the other hand, Xinjiang production was reported 30 kb/d higher than expected. In early October,
the typhoon‐hit Huizhou field came back onstream, while in early November, the 11 kb/d Luda 27‐2
platform started production in Bohai Bay.

Meanwhile, state oil company CNPC started building a port on Myanmar’s east coast, from which a crude
oil pipeline will ultimately run to southwestern China, thereby bypassing the congested (and pirate‐
ridden) Malacca Straits between Malaysia and Indonesia. This is another step in China’s ongoing efforts
to diversify its crude imports, adding to the Kazakhstan‐China crude pipeline and the soon‐to‐be‐
completed Eastern Siberia‐Pacific Ocean (ESPO) pipeline from Russia. Total Chinese domestic oil
production is forecast to average 3.8 mb/d in 2009 and to steadily rise to 4.1 mb/d in 2010.

mb/d China Total Oil Supply mb/d Other Asia Total Oil Supply
4.20 3.80
4.10
3.75
4.00
3.90 3.70
3.80 3.65
3.70
3.60
3.60
3.50 3.55
2007 2008 2007 2008

Other Asia: In India, August production was around 13 kb/d higher than forecast, at just under 790 kb/d,
on stronger condensate output. This has largely been carried through the forecast. In Indonesia, despite
government pressure on operator ExxonMobil to hike output, production at the troubled Cepu field was
apparently still only around 16 kb/d in early November. Export limitations appear to be the bottleneck,
rather than production per se, and it seems likely that state oil company Pertamina will offer to take
additional volumes. In Malaysia, September production was around 13 kb/d higher than our forecast. In
the Philippines, the offshore Galoc field once again experienced difficulties, this time due to a faulty
hose. Output was shut‐in in early November for a week. In Vietnam, news reports indicated production
at the Su Tu Vang field was halted in early November due to a water breakthrough, cutting around
30 kb/d for an undetermined period of time. Total Other Asian oil production is forecast at 3.6 mb/d in
2009, rising to 3.7 mb/d in 2010. Around 75 kb/d of that growth is due to the new Mangala field
complex in Rajasthan in India.

Brazil – August actual: Brazilian crude production in August was reported around 65 kb/d higher than
forecast and once again rose to a new record at over 1.9 mb/d. Part of this was offset by lower fuel
ethanol production (see Biofuels Update), with a lower ethanol outlook also for 2010. On the crude side,
the Urugua/Tambau field start‐up has been brought forward to 2Q10, ultimately to add 35 kb/d. On the
other hand, the projected ramp‐up of output at the Tupi pilot field has been slipped to 3Q10. Currently,
production is constrained at 20 kb/d, but should start to rise towards 100 kb/d late next year. Total
Brazilian liquids production is now forecast to average 2.5 mb/d in 2009 and to rise to 2.7 mb/d in 2010.

Oman – August actual: In Oman, there are indications that enhanced oil recovery (EOR) projects are
beginning to have an impact on oil production in mature fields. As a result, 2009 and 2010 output
forecasts have been revised up 10 kb/d and 20 kb/d respectively, now to reach 800 kb/d this year and
rise to 840 kb/d in 2010.

mb/d Non-OPEC MidEast Total Oil Supply mb/d Non-OPEC Africa Total Oil Supply
1.75 2.65
2.60
1.70
2.55
1.65
2.50
1.60
2.45
1.55 2.40
2007 2008 2007 2008

Non‐OPEC Africa: In Sudan, the oil minister admitted that 2009 oil production had disappointed so far.
Despite an ambitious plan to increase production to 600 kb/d, actual output has not even averaged
500 kb/d. According to the minister, delays by contractors and large volumes of water in the key Nile
and Dar Blend crude streams are ongoing problems affecting production. On this basis, 2009 production
is revised down 10 kb/d, to average 470 kb/d, while 2010 production is now assumed flat year‐on‐year, a
downward adjustment of 30 kb/d. In Tunisia, the offshore Hasdrubal gas field started production in
November, and is expected to add around 15 kb/d of condensate when it reaches peak capacity early
next year. This led to an upward adjustment in total output, now set to reach 120 kb/d in 2009 and
140 kb/d in 2010.


I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT OECD S TOCKS
OECD STOCKS

Summary
• OECD industry stocks rose by 1.6 mb in September, to 2,774 mb. The rise was in line with the five‐
year average build of 2.0 mb. Gasoline stocks increased more than normal, particularly in North
America. Middle distillate stocks remained largely unchanged, as a European draw offset a North
American build. Crude stocks declined almost 10 mb, driven by a fall in Pacific holdings.
• In 3Q09, total OECD industry stocks increased by 150 kb/d, less than the 10‐year average build of
280 kb/d and the five‐year average build of 450 kb/d. Crude stocks drew faster than normal, falling
370 kb/d versus the 10‐year average draw of 290 kb/d and the five‐year average draw of 270 kb/d.
• OECD stocks in days of forward demand fell to 60.0 days as of end‐September, down from 60.9 days
at end‐August. Days cover fell sharpest in the Pacific, particularly in the crude category. Both Pacific
crude and products trended along the top of the five‐year range while days cover in North America
and Europe for both categories remained above the five‐year range.
• Preliminary data indicate OECD industry stocks fell counter‐seasonally by 28.9 mb in October, driven
by a 28.8 mb products decline. Roughly 40% of the products draw came in middle distillates, driven
by the US and Europe. Crude stocks drew 0.1 mb, as US and Japanese draws offset a European build.
• Short‐term crude floating storage levels at end‐October hovered near 60 mb, relatively unchanged
from an upwardly revised end‐September number. Short‐term products floating storage continued to
rise, to over 80 mb at end‐October from 75 mb at end‐September, with most of the build occurring in
the Asia‐Pacific. Some market estimates put products floating storage almost as high as 100 mb.

kb/d OECD Total Oil Stocks mb OECD Middle Distillate Stocks mb

2,100
1,800 650 100
1,500 80
1,200 600
60
900 550 40
600
300 500 20
0 0
450
-300 -20
-600 400 -40
-900 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09
1984 1989 1994 1999 2004 2009 Difference to 5-Year Average (rhs)
Third Quarter Stock Change OECD M iddle Distillate Stocks

OECD Stock Position at End-September and Revised Preliminary Data
The OECD industry stock position did not significantly change in September and at month‐end stood at
2,774 mb. Total oil inventories increased 1.6 mb, in line with the five‐year average build of 2.0 mb. The
OECD total oil surplus to the five‐year average remained essentially flat versus August at 120 mb. Yet, an
Preliminary Industry Stock Change in September 2009 and Third Quarter 2009
September (preliminary) Third Quarter 2009
(million barrels) (million barrels per day) (million barrels per day)
N. Am Europe Pacific Total N. Am Europe Pacific Total N. Am Europe Pacific Total
Crude Oil -1.4 -1.3 -7.1 -9.8 -0.05 -0.04 -0.24 -0.33 -0.18 -0.06 -0.13 -0.37
Gasoline 7.7 1.8 1.0 10.4 0.26 0.06 0.03 0.35 -0.01 0.00 -0.01 -0.02
Middle Distillates 7.2 -9.0 1.7 -0.1 0.24 -0.30 0.06 0.00 0.16 0.10 0.12 0.37
Residual Fuel Oil 1.4 -0.9 -0.4 0.0 0.05 -0.03 -0.01 0.00 -0.02 -0.10 0.03 -0.09
Other Products -1.4 1.0 0.1 -0.3 -0.05 0.03 0.00 -0.01 0.06 0.05 0.09 0.21
Total Products 14.8 -7.1 2.3 10.0 0.49 -0.24 0.08 0.33 0.19 0.05 0.22 0.47
Other Oils1 -1.8 0.8 2.4 1.3 -0.06 0.03 0.08 0.04 0.00 0.03 0.02 0.06
Total Oil 11.6 -7.6 -2.4 1.6 0.39 -0.25 -0.08 0.05 0.01 0.03 0.12 0.15
1 Other oils includes NGLs, feedstocks and other hydrocarbons.

OECD S TOCKS I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT
upward revision to August OECD stocks indicates that the five‐year surplus for that month stood 23.2 mb
higher than indicated in last month’s report. Almost one‐third of the August upward revision came in
middle distillates. With September middle distillate stocks essentially unchanged versus the previous
month, the OECD surplus to the five‐year average in that category grew to 76 mb.

OECD North America days OECD Pacific Crude Oil Stocks
mb Crude Oil Stocks mb Days of Forward Demand
560 80 25
510 60
40
460
20 20
410 0
360 -20
15
Sep 07 Mar 08 Sep 08 Mar 09 Sep 09
Diff to 5-Year Average (rhs) Range 2004-2008 2008
OECD North America Crude Stocks 2009 Avg 2004-2008

The OECD crude surplus narrowed, to 39 mb, on the back of a larger than average September crude
draw. Yet, almost all of this surplus remains in North America, where crude stocks were little changed.
By contrast, Pacific crude stocks have run a consistent deficit to the five‐year average and have come
down to the five‐year range in days of forward cover despite expectations of weak refinery runs ahead.

Revisions versus 09 October 2009 Oil Market Report
(million barrels)
North America Europe Pacific OECD
Jul 09 Aug 09 Jul 09 Aug 09 Jul 09 Aug 09 Jul 09 Aug 09
Crude Oil 2.5 -5.6 3.8 4.0 0.4 2.2 6.7 0.7
Gasoline 0.0 3.1 0.4 -1.1 0.0 0.3 0.5 2.3
Middle Distillates 0.0 2.0 -0.3 5.4 0.2 0.0 0.0 7.5
Residual Fuel Oil 0.0 -2.0 -1.1 0.9 0.0 0.3 -1.1 -0.7
Other Products 0.3 5.1 0.1 3.2 -0.1 -0.6 0.4 7.7
Total Products 0.3 8.3 -0.8 8.5 0.2 0.0 -0.3 16.8
Other Oils1 -0.6 4.2 0.0 1.1 0.0 0.5 -0.6 5.7
Total Oil 2.2 6.8 3.0 13.6 0.6 2.8 5.8 23.2
1 Other oils includes NGLs, feedstocks and other hydrocarbons.

Indeed, tightening days cover in the Pacific helped OECD total oil demand cover fall to 60 days for the
first time since early 2009. Of course, this lower days‐cover stems from expectations of higher three‐
month forward demand rather than drawing inventories. While part of this demand strength arises from
an anticipated improvement in 4Q09 economic conditions, it also relies upon seasonal winter weather
patterns. A large October OECD stockdraw of 28.9 mb (around 40% from middle distillates), based on
preliminary data, suggests OECD forward cover could fall below 60 days over the next month. Still, with
continued builds in products floating storage, a warmer‐than‐normal winter in the OECD or weaker‐than‐
expected economic growth, OECD days of forward could equally remain inflated in the months ahead.

Analysis of Recent OECD Industry Stock Changes
OECD North America
North American industry stocks rose 11.6 mb in September, led by gains in US gasoline and middle
distillates of 7.7 mb and 7.2 mb, respectively. US commercial crude stocks declined slightly by 2.5 mb
while US government crude holdings increased by 1.0 mb. Mexican crude inventories increased by
1.1 mb, driving most of the Mexico’s 1.2 mb total oil build. The North American crude surplus to the
five‐year average remained high, at 42.5 mb, though this is down from 57.4 mb in July.

OECD North America mb US Weekly Industry Crude Oil

mb mb
Crude Oil Stocks Stocks
560 80 390
60 370
510
40 350
460 330
20
410 310
0
290
360 -20
270
Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Source: EIA
250
Difference to 5-Year Average (right axis) Jan Apr Jul Oct
OECD North America Crude Stocks Range 2004-08 5-yr Average
2008 2009

Preliminary data through 30 October point to an 18.9 mb drop in US stocks in October, when stocks
more typically remain static. US crude stocks drew 1.8 mb as lower imports balanced lower refinery
runs. Historically low imports may persist in forthcoming weekly reporting with the temporary closure of
the Louisiana Offshore Oil Port (LOOP) due to Tropical Storm Ida. The Strategic Petroleum Reserve (SPR)
levels remained unchanged in October while, 1 mb of filling is expected for November and 0.5 mb is
expected for December. Crude stocks at Cushing, Oklahoma remained relatively unchanged at 25.5 mb.

mb US Weekly Total Diesel Stocks mb US Weekly PADD 1 Heating Oil

125 Stocks
115 50
45
105 40
95 35
85 30
25
75
20
65 15
Source: EIA Source: EIA
55 10
Jan Apr Jul Oct Jan Apr Jul Oct
Range 2004-08 5-yr Average Range 2004-08 5-yr Average
2008 2009 2008 2009

US product stocks fell by 17.1 mb in October driven by decreases in gasoline stocks (‐5.3 mb), distillate
stocks (‐4.2 mb) and ‘other oils’ (‐5.1 mb). In distillate, about three‐quarters of the draw came from
diesel, marking the first monthly draw of that category since March of this year. Still, more of the surplus
in distillate continued to lie on the diesel side as heating oil stocks for the US as a whole trended only
along the five‐year average. Yet, on the US East Coast, heating oil inventories remained healthier in the
top half of the five‐year range, despite drawing slightly in October.

OECD Europe
European inventories fell by 7.6 mb in September, as middle distillates decreased 9.0 mb. The middle
distillate draw was larger than the five‐year average draw of 5.6 mb, but effectively was weaker than the
headline number suggested. September products floating storage – mostly middle distillates – off
mb mb
OECD Europe German End User HO Stocks
%
Middle Distillate Stocks % of Storage Capacity
320 50 70
300 40 65
30
280 20 60
260 10 55
240 0 50
-10
220 -20 45
200 -30 40
Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Jan Mar May Jul Sep Nov Jan
Difference to 5-Year Average (right axis) Range 2004-2008 2008
OECD Europe Middle Distillate Stocks 2009 Avg 2004-2008

Northwest Europe and the Mediterranean increased by over 8 mb, implying a more static overall stock
change when including offshore stocks. Moreover, German consumer heating oil stocks continued to
increase, moving from 66% capacity fill to 68% at month‐end, suggesting that some of the draw in
primary stocks merely went to buoy consumer inventories. The OECD Europe middle distillate stock
surplus to the five‐year average remained high at 37.4 mb, relative to its 2009 peak of 43.3 mb in May.

European crude stocks remained above the five‐year average but within the five‐year range. Gasoline
and residual fuel oil remained relatively steady on the month but both categories are trending at the
bottom of the five‐year range.

mb mb OECD Europe Fuel Oil Stocks
OECD Europe mb
360 Crude Oil Stocks 30 90
20 85
340
10 80
320 75
0
300 70
-10
65
280 -20 Jan Mar May Jul Sep Nov Jan
Sep 07 Mar 08 Sep 08 Mar 09 Sep 09
Range 2004-2008 2008
Difference to 5-Year Average (right axis) 2009 Avg 2004-2008
OECD Europe Crude Stocks

October preliminary data point to further product draws, particularly in middle distillates. Gasoil stocks
held in NW Europe independent storage fell by over 2 mb, though they remained well above the five‐
year range. Jet fuel/kerosene and naphtha posted draws on the month and the latter category fell to
five‐year lows. Products floating storage off Northwest Europe and in the Mediterranean fell by about
3 mb. Moreover, EU‐16 preliminary stock data from Euroilstock showed middle distillate stocks
decreasing 6.8 mb in October. Other EU‐16 categories showed smaller changes with gasoline decreasing
1.5 mb and crude stocks building 2.3 mb.

OECD Pacific
Pacific industry stocks fell by 2.4 mb in September, driven by a 7.1 mb decline in crude. Japanese crude
inventories fell by 12.3 mb to below the five‐year range and to 20 mb under the five‐year average.
Japanese crude stocks have drawn almost 24 mb since June despite historically low crude runs. Korean
crude stocks, by contrast, have risen almost 10 mb since June and ended September at the top of the
five‐year range. On a days cover basis, the Korean crude stocks are also at the top of the five‐year range,
while the Japanese inventories are only at five‐year average levels.
Japan Crude Oil Stocks mb Korea Crude Oil Stocks
mb
150 40
140 35
130 30
120 25
110 20
100 15
Range 2004-2008 2008 Range 2004-2008 2008
2009 Avg 2004-2008 2009 Avg 2004-2008

Product inventories rose 2.3 mb on gains in gasoline and distillate of 1.0 mb and 1.7 mb, respectively. Residual
fuel oil stocks fell by 0.4 mb. On a days cover basis, gasoline, distillates and fuel oil trended at the top or above
the five‐year range, while the ‘other products’ category remained near the bottom of the five‐year range.

OECD Pacific Crude Oil Stocks mb Japan Weekly Kerosene Stocks

days
Days of Forward Demand 40
35
25
30
25
20 20
15
10
15
5 Source: PAJ
Range 2004-2008 2008 Jan Apr Jul Oct
2009 Avg 2004-2008 Range 2004-08 5-yr Average
2008 2009
Weekly data from the Petroleum Association of Japan (PAJ) point to a commercial stockdraw of 4.2 mb in
October, with crude falling by 0.7 mb and products decreasing by 3.5 mb. Crude stocks continued to
trend under the five‐year range as correspondingly low refinery utilisation has dampened the need to
hold higher inventories. Kerosene stocks drew counter‐seasonally by 1.3 mb, when they usually rise by
2.0 mb, and fell further below the five‐year range. However, with jet fuel/kerosene demand expected to
fall by 11.1% y‐o‐y from October‐March and heating usage in structural decline, lower stock levels may
not signal a tightening of regional kerosene markets. In other product categories, residual fuel oil drew
by 2.3 mb while gasoil, jet fuel and gasoline all built slightly or remained unchanged.

Recent Developments in Singapore and China Stocks
Singapore product stocks declined slightly in October by 0.2 mb. A rise in fuel oil stocks of 1.33 mb only
partially offset a fall in middle distillates of 1.0 mb and a decrease in light distillates of 0.6 mb. All
inventory categories remained at historical highs near or above the five‐year range. However, middle
distillate stocks have drawn down to near 2008 levels for the first time this year.

Singapore Weekly Middle Distillate mb Singapore Weekly Residue Stocks
mb 25
Stocks
16
14 20
12
15
10
8
10
6
Source: International Ent erprise Source: International Ent erprise
4 5
2008 2009 2008 2009

China Oil Gas and Petrochemicals (OGP) announced a cessation of monthly reporting of crude, gasoline
and gasoil inventories. As such, for the time being, we will not include these figures in the OMR. We will
reinstate coverage if and when the data are made available again in the future.


Regional OECD End-of-Month Industry Stocks

(in days of forward demand and millions barrels of total oil)
Days1 Million Barrels
Days mb North America
North America
64 1,450
1,400
59 1,350
1,300
54 1,250
1,200
49 1,150
1,100
44 1,050
Range 2004-2008 2008 Range 2004-2008 2008
2009 Avg 2004-2008 2009 Avg 2004-2008
Days Europe mb Europe

72 1,020
70 1,000
68 980
66 960
64 940
62 920
60 900
58 880
56 860
Range 2004-2008 2008 Range 2004-2008 2008
2009 Avg 2004-2008 2009 Avg 2004-2008
Days Pacific mb Pacific

60 480
460
55
440
50
420
45
400
40 380
Range 2004-2008 2008 Range 2004-2008 2008
2009 Avg 2004-2008 2009 Avg 2004-2008
Days OECD Total Oil mb OECD Total Oil

63 2,800
61 2,750
2,700
59
2,650
57
2,600
55 2,550
53 2,500
51 2,450
49 2,400
Range 2004-2008 2008 Range 2004-2008 2008
2009 Avg 2004-2008 2009 Avg 2004-2008
1 Days of forward demand are based on average demand over the next three months

I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT P RICES
PRICES

Summary
• Crude oil prices rose to their highest levels in more than a year in October, with WTI and Brent
futures up by an average of around $6/bbl for the month, to $75.82/bbl and $73.93/bbl, respectively.
Growing expectations for fledgling economic recovery continued to exert upward pressure on
markets. WTI briefly traded at over $81/bbl before settling in a $75‐80/bbl range by early November.
• US West Texas Intermediate’s (WTI) reign as a global oil price benchmark looks increasingly
precarious after Saudi Aramco announced in late October that is was replacing the volatile marker as
the basis for pricing its sales to the US with a US Gulf Coast sour crude index that is more akin to its
own crude quality, starting in January 2010.
• Higher refined product prices were supported by fledgling oil demand growth in key markets in
October but ample distillate stocks both onshore and held in floating storage may temper further
increases. Refined products held in floating storage rose to over 80 mb at end‐October from 75 mb at
end‐September, with most of the build occurring in the Asia‐Pacific. Other market estimates put
products floating storage as high as 100 mb. Even a colder‐than‐normal winter demand season may
only make a dent in the massive inventory overhang.
• Refining margins were generally lower in October, with cracking margins in Europe and the US Gulf
Coast the exception thanks to relatively stronger spot gasoline prices. Hydroskimming margins
deteriorated further in October, especially in Asia, and remained heavily negative.
$/bbl Benchmark Crude Prices

US$/bbl S&P 500 vs NYMEX WTI Index
85
150 1600
80
130 1400
75
110
70 1200
90
65 1000
70
60 Source: Platt s 800
50
55 So urce: P latts
30 600
Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09
Jan 08 Jul 08 Jan 09 Jul 09
WTI Cushing Dated Brent Dubai NYMEX WTI S&P 500 (RHS)

Market Overview
Crude oil prices rose to their highest levels in more than a year in October, breaching the $65‐75/bbl
trading range seen over the past three months and settling in a $75‐80/bbl range late in the month and
into early November. Financial markets continued to exert upward pressure and growing expectations
for a significant resurgence in oil demand next year lifted prices, at times, to over $80/bbl.

Futures prices for benchmark crudes WTI and Brent rose on average by around $6/bbl in October, to
$75.82/bbl and $73.93/bbl, respectively. Prices took a hit again in early November after the US Labor
Department reported that the unemployment rate rose to a 26‐year high, fuelling fears of a protracted
economic recovery. However, the downturn proved fleeting with prices quickly rebounding on the late
season arrival of Tropical Storm Ida in the Gulf of Mexico. Prices jumped more than $2/bbl on 9
November as operators shut‐in oil and gas fields in the path of the storm. The US Gulf Coast is home to
roughly 25% of US oil production, 15% of natural gas output and 40% of the country’s refining capacity.
But prices ebbed marginally lower as Ida gradually weakened. Most recently futures prices were up by
$3‐4/bbl over October levels, with WTI last trading around $79 and Brent at $78/bbl.

P RICES I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT
Bullish economic data underpinned the rise in oil prices through much of October. GDP data showing
that the US economy grew at an annualised rate of 3.5% in the third quarter pushed WTI over $80/bbl
and sparked a rise in equity markets to their best one‐day percentage gain in three months in October.
At first glance, the data were hailed as marking the end of recession in the US. On closer examination it
appears much of the recovery was driven by one‐off measures such as the ‘cash‐for‐clunkers’ car
purchasing programme, and a temporary homebuyer tax credit, among other stimulus measures. As a
result, ‘real’ growth may be more moderate than initially perceived.

That said, the nascent recovery in oil demand in some pivotal markets appears to be underpinning stronger
oil prices. Preliminary US oil demand data suggest a substantial 1.7 mb/d month‐on‐month increase in
October. China’s economic engine is also gathering steam
judging by latest apparent demand estimates. This month’s $/bbl OPEC Basket Price
OMR sees China’s year‐on‐year oil demand up by 15% in 80
September, or more than double the previous estimate. 75

Global oil demand is now forecast to rise by 1.3 mb/d, to 70
86.2 mb/d in 2010. However, the much‐anticipated
65
resurgence in oil demand is being tempered by a
historically large overhang of refined products stocks held 60
in floating storage, estimated at 80 mb at end October. Source: Platts
Even a colder‐than‐normal winter demand season may only 55
make a dent in the massive inventory overhang.

The steady rise in both OPEC and non‐OPEC production is also weighing on markets. Non‐OPEC output was
revised up in October while OPEC output rose for the sixth month running. OPEC production could
continue its upward trend as some Gulf countries have indicated they are easing contractual cuts for
November and December. In addition, the success of the Nigerian government’s amnesty programme for
rebel groups holds the potential that the country’s oil production will rise in coming months.

The steep jump in monthly oil prices of 93% for WTI and 68% for Brent since February’s low has likely
encouraged slippage from output targets and some countries may even quietly add more supplies to the
market in a bid to calm down prices. A small contingent of OPEC members is reportedly worried that oil
prices above $80/bbl could threaten the global economic recovery and trigger another round of
demand destruction.

Futures Markets
Prompt month oil prices closely tracked the exceptional US$/bbl NYMEX WTI vs Dollar Index Index
gains in global equity markets in October. The Dow 150 70
Jones hit a 13‐month high on 9 November. The G‐20 130
decision’s to continue stimulus measures and the US 75
110
Federal Reserve’s announcement that it would hold
90 80
interest rates at current rock‐bottom levels helped push
the US dollar to a 15‐month low against a basket of 70
85
major currencies. As a result, market reports suggest 50
So urce: ICE, P latts
investors continue to shift funds into commodity 30 90
markets as a hedge against inflation. Jan 08 Jul 08 Jan 09 Jul 09
NYMEX WTI US Dollar Index (inversed RHS)

To what extent investment funds influence prices, however, is still no clearer after the US Commodities
Futures Trading Commission (CFTC) published the much‐anticipated three‐year historical data series for the
disaggregated version of its Commitments of Traders report on 20 October (for more details see CFTC Unveils
New Disaggregated Report in report dated 9 October 2009).

While the time series sheds some light on the breakout of players, it falls short of expectations by some
that the new reporting format may prove a correlation, or even causality, between the positions of
money managers or swap dealers and price movements. For example, when prices were at $140/bbl,
swap dealers held 39,000 net long contracts and money managers were net long of 61,000 lots. When
prices hovered at below $40/bbl levels, the swap dealers held 160,000 net long positions and money
managers were exposed to 31,000 net longs.
'000 NYMEX WTI Mth1 '000 Net Positions in WTI Futures

$/bbl $/bbl
Contracts Open Interest contracts
1,600 150 250 150
1,500 130 150
1,400 Source: CFTC, Platt s
110 100
50
1,300
90
1,200 -50
70 50
1,100 -150
1,000 50
-250 Source: CFTC, Platts 0
900 30
J un- 0 6 M a r- 0 7 D ec-07 S e p- 0 8 J un- 0 9
Jun 08Sep 08Dec 08Mar 09 Jun 09Sep 09 P roducers Swap Dealers
M oney M anagers Other Reportables
Open Interest NYM EX WTI M th1 Non-Reportables WTI - RHS

The historical time series does offer some interesting details. The new disaggregated data show that
producers usually hold net short positions, while swap dealers have net long exposure in NYMEX WTI
futures. Money managers are generally net long with the exception of a brief period from 21 October
2008 to beginning of December 2008. During this time money managers held net short positions and the
price of WTI plunged from $69/bbl to $45/bbl. Interestingly, in the past few weeks the money managers
more than doubled their net long positions. A similar situation occurred during July 2007 when money
managers almost doubled their net long positions while crude price rose $7/bbl. In summary, it appears
that financial flows can occasionally, and in the short term, augment price volatility but a persistent
price‐driving role remains difficult to establish.

Spot Crude Oil Markets
Spot crude prices rose across all major regions in $/bbl Benchmark Crude Prices
October, with prices for benchmark grades up on Differentials to Brent
average by $5‐6/bbl. But reduced refinery runs and 5
weak margins in the US and Europe saw spot prices edge 3
lower later in the month. 1

-1 So rce
In Asia, Chinese crude buying remained brisk as refiners
-3 Source: Platt s
ramped up throughput rates to record levels. Reduced
volumes of medium and heavy sour grades from OPEC -5
served to prop up Dubai prices. Prices for heavier Dubai Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09
crude versus Brent moved to a premium of 40 cents/bbl WTI-DB Dubai-DB
Urals NWE-DB
in October compared with 25 cents/bbl in September
and a discount of around $1.50/bbl in August.


Spot Crude Oil Prices and Differentials
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WTI – For Which The Bell Tolls?
The reign of US West Texas Intermediate (WTI) as the pre‐eminent crude price benchmark looks increasingly
precarious after Saudi Aramco announced in late October that is was replacing the volatile light sweet crude
oil as the basis for pricing its sales to the US. Instead, Saudi Aramco will use a sour crude index that is more
representative of its own crude grades starting in January 2010.
Saudi Aramco said its decision to use the recently launched Argus Sour Crude Index (ASCI), (based on Mars,
Poseidon and Southern Green Canyon crudes from the US Gulf Coast) was due to wild volatility and regional
distortions in WTI prices. Saudi Arabia's exports to the United States are mostly medium‐sour crudes.
Aramco previously used WTI prices published by Platts as its price market, which are closely linked with the
NYMEX light sweet futures contracts.
The change in contract pricing comes at a time when Saudi sales to the US have dropped to the lowest level
in more than 20 years. US imports of Saudi crude fell to 745 kb/d in August compared with a year to date
average of around 1 mb/d, and 1.5 mb/d in 2008, though part of the drop reflects reduced demand by
refiners in the wake of the economic crisis. Saudi Arabia’s switch away from WTI is expected to trigger a
similar shift by other sellers of medium, sour crudes. Roughly 5.0 mb/d of US imports are pegged to
WTI prices.
Arguably US WTI has been the most important price benchmark for several decades but its fall from grace
was long in the making. WTI largely gained its stature after the New York Mercantile Exchange (NYMEX)
started using it in 1983 as the basis for its light, sweet crude contract. Inherent logistical flaws given the
contracts delivery point at the landlocked Cushing,
$/bbl US Gulf Coast Crude Prices
Oklahoma frequently led to a disconnect from international
Medium / Sour differentials to WTI
markets (see WTI Benchmark: Past Imperfect, Future 1
Tense, in report dated 11 February 2009. 0
For all its flaws, WTI still has an important role to play since -1
spot prices will continue to be linked to the NYMEX WTI -2
contract Indeed, both the NYMEX and IPE are planning to -3
launch an Argus Sour Crude Index futures contract following
-4
Saudi Aramco’s decision to link its formula prices to the Source: Platt s
index. Derivative products are expected to emerge linking -5

the ASCI to the WTI contract in order to provide hedging Mars - WTI Poseidon - WTI
opportunities for buyers and sellers. WTS - WTI


Spot Product Prices

Spot product prices rose in all major regions in October but diverging market trends resulted in uneven
increases. Economic run cuts and scheduled refinery maintenance work continue to provide offsets for
an otherwise well supplied markets.

Gasoil/heating crack spreads in October improved by about $1.50‐2/bbl in Europe and the US but
weakened by around 50 cents/bbl in Singapore. Even the weather may not cooperate. Weather
forecasters are predicting a moderate winter season on both sides of the Atlantic, which will likely weigh
further on gas oil prices. Warmer than normal weather in Japan is also likely to reduce demand for
kerosene. In addition, Japanese consumers continue to switch to electric powered heaters and away
from kerosene‐fired units.

In Europe, imports of gasoil cargoes and jet fuel are moving into the region at a steady clip despite weak
demand and swelling stockpiles. The brisk trade largely reflects the strengthening contango in the ICE
gasoil futures contract. The wider contango, where front month contracts are cheaper than later
months, is still returning a decent profit. The front‐month November gasoil contract traded at a $10/mt
discount to the December contract and at a $20/mt discount to the January contract. Most of the
additional imports are expected to end up in storage.

$/bbl Gasoil/Heating Oil $/bbl Diesel Fuel
Cracks to Benchmark Crudes Cracks to Benchmark Crudes
12 36
32
10 Source: Platt s
28
8 24
20
6
16
4 12
8
2 Source: Platts
4
0 0
Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09
NWE Gasoil 0.1% NYH No. 2 NWE ULSD 10ppm NYH No. 2 LS
Med Gasoil 0.1% SP Gasoil 0.5% M ed ULSD 10ppm SP GO 0.05%

Fuel oil crack spreads were down on the month but staged a rebound as the month wore on in Europe
and the US. By contrast, Singapore fuel cracks deteriorated further on lacklustre demand from utilities,
for industrial use and marine bunkers. Low‐sulphur fuel oil cracks to Dubai were down by $4.76/bbl on
the month, to a negative $9.45/bbl, while high‐sulphur differentials were off a smaller $2.74/bbl to
minus $4.89/bbl. In Japan, higher utilisation rates at nuclear power plants have also curtailed fuel
oil purchases.

$/bbl Low-Sulphur Fuel Oil (1%) $/bbl High-Sulphur Fuel Oil
Cracks to Benchmark Crudes Cracks to Benchmark Crudes
2 2
0 0
-2 -2
-4
-4
-6
-8 -6
-10 -8
-12 -10 Source: Plat ts
-14 Source: Plat ts
-12
Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09
NWE LSFO 1% Med LSFO 1% NWE HSFO 3.5% Med HSFO 3.5%
SP LSWR SP HSFO 380 4%


Spot Product Prices
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Refining Margins
Refining margins were generally lower in October with cracking margins in Europe and the US Gulf Coast
the exception thanks to relatively stronger spot gasoline prices. Hydroskimming margins deteriorated
further in October, especially in Asia, and remained heavily negative.

Upgrading Margins European Upgrading Margins
$/bbl $/bbl
(Co king - Cracking in the US. (Cracking - Hydroskimming Margin)
Hydro cracking - Hydro skimming in A sia) 9
5 8
4 7
3 6
2 5
1 4
0 3
2
-1 1
-2 0
Jan 09 Mar 09 May 09 Jul 09 Sep 09 Jan 09 Mar 09 May 09 Jul 09 Sep 09
USGC (Mars) Singapore (Dubai) NWE (Urals) Med (Urals)

In the US, Gulf Coast margins improved for most cracking and coking configurations due to stronger
gasoline and gasoil/diesel differentials but still remained in negative territory. Cracking margins for
Bonny Light were ‐$1.65/bbl in October compared to ‐$2.68/bbl the previous month while Brent margins
were pegged at ‐$2.05/bbl compared with ‐$2.64/bbl over the same period. Normally stronger West
Coast margins also declined for both coking and cracking configurations.

Selected Refining Margins in Major Refining Centres

($ /bbl)
Monthly Average Change Average for w eek ending:

Aug 09 Sep 09 Oct 09 Oct 09-Sep 09 09 Oct 16 Oct 23 Oct 30 Oct 06 Nov
NW Europe Brent (Cracking) 0.61 0.66 0.91 Ï 0.25 0.76 0.60 0.43 1.77 0.49
Urals (Cracking) 0.92 0.56 0.81 Ï 0.25 0.75 0.53 0.57 1.41 0.47
Brent (Hydroskimming) -1.68 -0.80 -0.96 Ð -0.16 -0.71 -1.26 -1.58 -0.50 -1.37
Urals (Hydroskimming) -3.34 -2.69 -3.03 Ð -0.34 -2.38 -3.31 -3.51 -3.06 -3.45
Mediterranean Es Sider (Cracking) 0.41 0.33 -0.03 Ð -0.36 -0.21 -0.48 0.02 0.54 -0.73
Urals (Cracking) 1.03 0.91 0.83 Ð -0.09 0.97 0.48 0.66 1.10 0.33
Es Sider (Hydroskimming) -3.75 -2.81 -3.78 Ð -0.96 -3.65 -4.23 -3.93 -3.40 -4.41
Urals (Hydroskimming) -4.28 -3.41 -4.12 Ð -0.72 -3.29 -4.42 -4.73 -4.36 -4.44
US Gulf Coast Bonny (Cracking) -1.71 -2.68 -1.65 Ï 1.03 -1.95 -1.44 -1.26 -1.88 -3.60
Brent (Cracking) -1.94 -2.64 -2.05 Ï 0.59 -1.98 -2.08 -2.08 -2.10 -3.52
LLS (Cracking) 0.16 -1.65 -1.59 Ï 0.06 -1.77 -2.06 -1.22 -1.27 -2.96
Mars (Cracking) 1.08 0.82 -0.08 Ð -0.91 0.35 -0.65 -0.05 -0.24 -1.30
Mars (Coking) 1.01 -0.20 -0.12 Ï 0.08 -0.05 -0.59 0.03 -0.04 -2.21
Maya (Coking) -0.27 -2.58 -1.42 Ï 1.16 -1.69 -1.46 -1.43 -1.07 -3.67
US West Coast ANS (Cracking) 1.28 1.94 -1.91 Ð -3.85 -1.28 -2.58 -2.82 -1.62 -4.20
Kern (Cracking) 10.01 8.88 3.47 Ð -5.42 4.90 3.82 1.87 2.33 1.68
Oman (Cracking) 1.00 2.26 -1.70 Ð -3.96 -0.90 -1.38 -2.11 -2.97 -5.40
Kern (Coking) 15.88 14.37 7.83 Ð -6.54 8.68 8.57 6.78 6.44 3.61
Singapore Dubai (Hydroskimming) -2.79 -2.13 -4.31 Ð -2.18 -3.81 -4.51 -4.81 -4.33 -4.76
Tapis (Hydroskimming) -6.32 -3.60 -6.07 Ð -2.47 -5.50 -6.68 -6.65 -5.98 -6.37
Dubai (Hydrocracking) -1.64 -1.64 -3.55 Ð -1.91 -3.66 -3.74 -3.69 -3.22 -3.74
Tapis (Hydrocracking) -5.21 -2.68 -4.58 Ð -1.89 -4.65 -5.17 -4.77 -4.03 -4.43
China Cabinda (Hydroskimming) -6.29 -4.82 -8.03 Ð -3.21 -6.71 -8.30 -9.42 -8.60 -8.71
Daqing (Hydroskimming) -3.35 -2.48 -5.83 Ð -3.35 -4.10 -6.36 -7.01 -6.72 -7.27
Dubai (Hydroskimming) -3.04 -2.35 -4.60 Ð -2.26 -4.06 -4.76 -5.15 -4.69 -5.10
Daqing (Hydrocracking) -0.27 0.18 -2.61 Ð -2.79 -1.64 -3.27 -3.36 -2.84 -3.54
Dubai (Hydrocracking) -1.83 -1.79 -3.82 Ð -2.03 -3.87 -3.97 -4.03 -3.56 -4.09
Fo r the purpo ses o f this repo rt, refining margins are calculated fo r vario us co mplexity co nfiguratio ns, each o ptimised fo r pro cessing the specific crude in a specific refining centre
o n a 'full-co st' basis. Co nsequently, repo rted margins sho uld be taken as an indicatio n, o r pro xy, o f changes in pro fitability fo r a given refining centre. No attempt is made to mo del
o r o therwise co mment upo n the relative eco no mics o f specific refineries running individual crude slates and pro ducing custo m pro duct sales, no r are these calculatio ns intended
to infer the marginal values o f crudes fo r pricing purpo ses.
*The China refinery margin calculatio n represents a mo del based o n spo t pro duct impo rt/expo rt parity, and do es no t reflect internal pricing regulatio ns.
So urces: IEA , P urvin & Gertz Inc.
In Europe, only cracking margins improved over the month on stronger gasoil/diesel differentials to
crude. Cracking margins for both Brent and Urals in Northwest Europe were up by a modest
25 cents/bbl, to 91 cents/bbl and 81 cents/bbl, respectively.
Refining margins in Singapore and China fell month‐on‐month by around $2‐$3/bbl. In Singapore, Dubai
hydroskimming and hydrocracking margins were ‐$4.31/bbl and ‐$3.55/bbl, respectively.

End-User Product Prices in October
End‐user prices rose on average by 0.6% month‐on‐month End-User Product Prices
in October but were 27.1% below levels of a year ago, in US 5%
Monthly Changes
dollars, ex‐tax. Diesel, heating oil and low‐sulphur fuel oil 2.2% 1.1%
0.9%
prices on average rose by 0.9%, 2.2% and 1.1%,
respectively. However, gasoline prices ran against the trend
0%
last month and decreased by 2.0% in almost all surveyed
countries except Japan where petrol prices were unchanged
-1.6%
in domestic currency. Consumers in Japan on average paid
¥128.9/litre ($1.43/litre), in the US $2.55/gallon ($0.67/litre) -5%
and in the UK £1.05/litre ($1.71/litre). In Europe, the average Gasoline Diesel Heat.Oil LSFO
France Germ any Italy
price at petrol stations was between €1.05/litre ($1.55/litre) in Spain United Kingdom Japan
Spain and €1.29/litre ($1.91/litre) in Germany for gasoline. Canada United States AVERAGE

Freight
Freight rates remained under pressure from an oversupply of ships and lacklustre demand. At the
outbreak of the economic recession one year ago the demand for seaborne oil transport contracted in
percentage terms at more than twice the rate of global oil demand in a year when the tanker fleet grew
by 5%. While oil demand is expected to rise by 0.4 mb/d in 4Q09 compared to the previous quarter, high
tanker fleet additions combined with a further potential drawdown in crude floating storage could keep
freight rates under extreme pressure. Dirty freight rates were volatile in October, but performed better
than clean tanker rates.
Daily Crude Oil Tanker Voyage Daily Product Tanker Voyage Freight
Freight Rates (US$/tonne) Rates (US$/tonne)
20
30
20
10
10
Source: Platts Source: Platts

0 0
Jan/09 Mar/09 May/09 Jul/09 Sep/09 Nov/09 Jan 09 Mar 09 May 09 Jul 09 Sep 09 Nov 09
8 0 k t N S e a - N W E ur 13 0 k t W A f r- US A C 3 0 K C a rib - US A C 2 5 K UKC - US A C
V LC C M E G ulf - J a p 75K M EG-Jap 3 0 K S E A s ia - J a p

Mideast Gulf – Japan VLCC rates were stable at $8‐9/mt the first three weeks of October, then rising to
almost $10/mt over the last ten days of the month. After an end September uptick to $13/mt, Suezmax
West Africa – US Atlantic Coast rates fell down to $11/mt in the second week of October, before rising
steadily again to $15/mt. However, by early November gains for both tanker categories had begun to
falter. The Chinese holidays explain lower chartering activity in the first eight days of October, as well as
the rise that followed. A temporary rise in bunker prices during the third week of October sent prices
further up, as owners refused to assume higher losses. Aframax North Sea‐North West Europe rates
moved slightly higher to a level of around $5/mt, almost touching $6/mt during a mid‐month recovery.

Crude oil stored at sea remained at around 60 mb at end October, while floating storage of products
continued its upward surge, estimated at above 80 mb at the end of the month. Interestingly, much of
the increase in product storage appears to have come from products from Asian refinery centres stored
in two brand‐new VLCCs and one Suezmax tanker, located near their source refineries.

Clean rates were weaker, as Aframax Mideast Gulf – Japan rates sank throughout the month, reversing
last month’s rally, and ending at $21/mt from end‐September levels of $31.5/mt. Fewer large product
carriers were engaged in floating storage at the end of
mb Global Crude Floating Storage
October as compared to the end of September, as vessels
(short-term and semi-permanent)
of this category rushed to take advantage of the 175
Source: EA Gibson, SSY
temporary spike in rates. All benchmark rates were below 155
and IEA estimates
or at the lower rim of the five‐year range. 135
115
The tonnage growth for product carriers has outpaced 95
that of crude carriers this year, as the VLCC fleet got some 75
relief from three months of accelerated single‐hull phase‐ 55
out and some conversion activity, as well as a temporarily Jan Mar May Jul Sep Nov
Range 2004-08 2008
lower new‐build delivery rate due to negotiated delays. 2009 A verage 2004-08
Further, the trend of more long‐haul transportation of
crude oil, notably from West Africa to Asia, has been supportive of rates for crude carriers. However, the
weight of expected tanker deliveries continues to cast a shadow over the outlook for the tanker rates.

I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT R EFINING
REFINING

Summary
• Projected 4Q09 global crude throughput is reduced by 0.3 mb/d to 72.8 mb/d. The refining industry
continues to be squeezed by higher crude oil prices, falling OECD demand and high inventories of
middle distillates, all of which weigh on refining margins. Downward revisions in OECD regions,
following reported lower crude runs in the US, Europe and Japan, were partially offset by higher
estimates in China and Other Asia, following stronger 3Q09 data.

• Preliminary data indicate that 3Q09 global crude runs averaged 73.1 mb/d. August data turned out
higher by 0.3 mb/d, mainly the result of stronger runs in Brazil and in Other Asia. Preliminary data for
September was 0.9 mb/d stronger than expected, with runs in the OECD up by 0.3 mb/d, and up by
0.6 mb/d in the non‐OECD.

m b/d Global Refining m b/d OECD Total
Crude Throughput Crude Throughput
76 41
75 40
74 39
73 38
72 37
71 36
70 35
Range 04-08 Average 04-08 Range 04-08 Average 04-08
2010 est. 2009 actual/ est. 2010 est. 2009 actual/ est.

• August OECD refinery yields increased for gasoline, gasoil and fuel oil. Gasoline yields stayed above
the five‐year range, with gross output at 15.0 mb/d and 600 kb/d higher than last year’s level.
Gasoil/diesel yields moved back above the five‐year average level, with gross output at 12.5 mb/d,
960 kb/d below last year. Despite a wider discount to crude, fuel oil yields increased for the second
consecutive month as coking throughputs remained under pressure.

Global Refinery Overview
The refining industry continues to be squeezed by higher crude oil prices, falling OECD demand and high
inventories of middle distillates, all of which continues to weigh on refining margins. The profitability of
upgrading capacity has been particularly hard hit by OPEC cuts, which have narrowed heavy‐sour crude
discounts to light‐sweet grades. Furthermore, record crude runs in China and the ramp‐up of new
production capacity in India add further pressure on margins at uncompetitive refineries in OECD countries.

This month’s report sees further downward revisions to planned crude runs in 4Q09. Both independent
and majors’ 3Q09 refining results have been badly hit, ranging from striking decreases in net profits, to
net losses of hundred of million dollars, forcing some to idle refineries, streamline operations, shut down
non‐profitable plants and consider selling non‐core assets. On the other hand, the current situation may
turn out to be a good strategic opportunity for growth‐orientated Asian companies to expand their
presence in target regions through the acquisition of assets; effectively betting on strong demand
growth, once economic recovery filters through the refining industry. As such, the refining industry is
going through a painful, though necessary, process of adjusting to the changes in the competitive
landscape (see Is It Always Darkest in the Hour Just Before Dawn?).

12 November 2009 43

R EFINING I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT
Global Refinery Throughput

Despite the weak macro economic environment, 3Q09 global refinery throughput estimates are revised up
by 0.4 mb/d to 73.1 mb/d. August data turned out higher by 0.3 mb/d, mainly the result of higher runs in
Brazil and in Other Asia. Preliminary data for September was 0.9 mb/d stronger than expected, with runs in
the OECD revised up by 0.3 mb/d and by 0.6 mb/d in the non‐OECD. The quarterly year‐on‐year comparison
now shows a decline of 0.8 mb/d, significantly better than the 2.3 mb/d differential shown in 2Q09, although
the comparison is distorted by last year’s disruptions caused by hurricane activity in the US Gulf Coast.
Global Refinery Crude Throughput1

Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10
OECD
North America 17.7 17.6 17.3 17.5 17.0 17.2 17.2 17.1 17.1
Europe 12.3 12.6 12.4 12.5 12.0 12.0 12.2 12.4 12.3
Pacific 6.0 6.1 6.6 6.3 6.1 6.0 6.3 6.5 6.3
Total OECD 36.0 36.4 36.4 36.3 35.1 35.2 35.8 36.0 35.6
NON-OECD
FSU 6.1 6.1 6.3 6.2 6.3 6.3 6.4 6.4 6.4
Europe 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.8
China 7.8 7.8 7.7 8.0 8.0 8.0 8.0 8.0 8.0
Other Asia 8.3 8.2 8.6 8.9 8.5 8.6 8.7 9.0 8.8
Latin America 5.5 5.2 5.3 5.2 5.3 5.3 5.3 5.3 5.3
Middle East 6.0 6.0 6.1 6.0 6.1 6.2 6.3 6.2 6.3
Africa 2.3 2.2 2.2 2.2 2.3 2.3 2.3 2.3 2.2
Total Non-OECD 36.7 36.2 36.8 37.4 37.2 37.5 37.8 37.9 37.7
Total 72.7 72.6 73.2 73.7 72.3 72.7 73.5 73.9 73.3

1 Crude runs in italics are estimates. Forecast crude throughput is based on current IEA demand forecast s.

Conversely, we have decreased our 4Q09 projection by 0.3 mb/d, to 72.8 mb/d, following a significant
reduction of 0.8 mb/d in OECD runs and an upward revision of 0.5 mb/d for non‐OECD. The increase in non‐
OECD results from higher Other Asia projections (+0.4 mb/d), as reported crude runs continue to exceed
previous estimates, and upwardly revised demand forecasts. The reduction in OECD runs is the result of
protracted poor margins, persistent high middle distillate inventories, competition from higher runs in non‐
OECD and announcements by some majors in the US, Europe and Japan of further crude run cuts in 4Q09.

January 2010 throughput of 73.9 mb/d remains the seasonal peak, but this estimate is reduced by
0.2 mb/d. This minor change to the overall total masks a reduction of 0.7 mb/d in OECD crude runs, as
refiners in the US and the Pacific are forced to further reduce crude runs in order to cope with higher
output in Other Asia and China, which have been raised by 0.5 mb/d and 0.1 mb/d, respectively.
February crude throughput is initially estimated at 73.3 mb/d, in line with the normal seasonal pattern.

OECD Refinery Throughput
OECD crude throughput estimates for 3Q09 have been revised up by 0.1 mb/d to 36.3 mb/d as August
data turned out marginally lower and September preliminary data were 0.3 mb/d ahead of projections,
mainly the result of higher‐than‐expected runs in the UK, Belgium and Greece. This new estimate for
3Q09 represents a quarter‐on‐quarter increase of 0.4 mb/d, but a 1.2 mb/d decrease year‐on‐year.

Preliminary data for September indicate that OECD crude throughput averaged 36.3 mb/d, an increase of
0.7 mb/d compared to last year’s hurricane‐depressed baseline. However, on a monthly basis, September
crude runs were marginally lower, with higher North America and Europe crude runs partially
compensating a fall in the Pacific, where the start of seasonal maintenance in Japan lowered activity levels.
44 12 November 2009

North American September crude throughput is 1.9 mb/d higher year‐on‐year, mainly as a consequence
of last year’s disruptions caused by Hurricanes Gustav and Ike, which significantly dented crude runs in
the region. This year saw no material impact from hurricanes during September, and indeed for the
summer as a whole.
Refinery Crude Throughput and Utilisation in OECD Countries

Change from Utilisation rate1
Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Aug 09 Sep 08 Sep 09 Sep 08
OECD North Am erica

US2 14.35 14.46 14.84 14.63 14.57 14.79 0.22 2.03 83.67 72.46
Canada 1.50 1.65 1.73 1.79 1.51 1.47 -0.04 -0.19 72.67 82.26
Mexico 1.30 1.23 1.14 1.21 1.27 1.25 -0.02 0.10 81.08 71.96
Total 17.16 17.34 17.72 17.63 17.34 17.50 0.16 1.93 82.43 73.55
OECD Europe
France 1.51 1.66 1.57 1.56 1.45 1.40 -0.05 -0.36 71.65 90.18
Germany 2.21 2.06 2.13 2.12 2.12 2.04 -0.08 0.08 84.31 81.02
Italy 1.68 1.58 1.59 1.71 1.70 1.69 -0.01 -0.04 72.43 74.23
Netherlands 1.02 1.01 0.84 0.89 0.94 1.04 0.10 -0.01 85.79 86.38
Spain 1.17 1.01 0.97 1.06 1.01 1.02 0.01 -0.22 80.10 97.49
UK 1.36 1.35 1.45 1.50 1.46 1.52 0.07 -0.14 80.81 88.12
Other OECD Europe 3.75 3.77 3.73 3.82 3.76 3.76 0.00 -0.29 80.04 86.15
Total 12.68 12.43 12.28 12.64 12.44 12.47 0.04 -0.98 79.07 85.27
OECD Pacific
Japan 3.31 3.20 2.99 3.17 3.53 3.39 -0.13 -0.09 72.57 74.46
Korea 2.33 2.08 2.28 2.26 2.34 2.25 -0.09 -0.17 82.41 88.56
Other OECD Pacific 0.69 0.70 0.69 0.69 0.71 0.66 -0.05 0.02 82.13 80.04
Total 6.33 5.98 5.97 6.12 6.58 6.31 -0.26 -0.24 76.79 79.70
OECD Total 36.17 35.76 35.96 36.39 36.36 36.28 -0.07 0.71 80.23 78.76
1 Expressed as a percentage, based o n crude thro ughput and current o perable refining capacity
2 US50

In the US, some refiners have announced further run cuts for 4Q09 on low profitability. Valero, the
largest independent US refiner with a combined capacity of almost 3 mb/d, announced the reduction of
crude runs to 73% in 4Q09 from a 3Q09 level near to 80%, driven by maintenance and economic run
cuts. ConocoPhillips, with a reported global refining capacity close to 2.7 mb/d, announced plans to
reduce 4Q09 refinery utilisation rates to the upper 70% range from 3Q09 runs close to 90%. In addition,
Sunoco has recently announced the indefinite shut down of its 145 kb/d Eagle Point refinery in New
Jersey a process that, by 5 November, appeared to be complete.
US Weekly Refinery Utilisation Japan Weekly Refinery Utilisation

100% 100%
95% 95%
90% 90%
85%
85%
80%
80%
75%
75% 70%
70% 65%
Source: EIA Source: PAJ
65% 60%
Range 2004-08 5-yr Average R a nge 2 0 0 4 - 0 8 5 - yr A v e ra ge
2008 2009 2008 2009

Weekly US refinery utilisation rates have now returned to levels below the five‐year range, a pattern only
interrupted this year by the absence of hurricane‐related disruptions. At the time of writing Tropical
Storm Ida was approaching the Eastern US Gulf Coast, suggesting that some disruption to Chevron’s
12 November 2009 45

300 kb/d Pascagoula refinery may be possible, but more widespread disruption looks unlikely at this
time. Nevertheless, North American 4Q09 projections have been reduced further this month by
0.4 mb/d to an average of 17.1 mb/d.

European crude runs were 0.2 mb/d higher than expected in September, remaining constant compared
to August, but 1.0 mb/d lower year‐on‐year. Utilisation rates remained particularly weak in France and
Italy. The disruption to the SPSE pipeline, in Southern France prompted Petroplus to bring forward
planned maintenance at its 85 kb/d Reichstett refinery in France from 2Q10 and it is now expected to be
operational in December. Petroplus’ 68 kb/d Cressier refinery in Switzerland, also closed after the
pipeline accident, has already restarted operations. Elsewhere, we have assumed that the shutdown of
Total’s Dunkirk refinery in France now continues into 1Q10, due to continued poor economics.
OECD North America OECD Europe

m b/d m b/d
20.0 14.5
19.0 14.0
18.0 13.5
17.0 13.0
16.0 12.5
15.0 12.0
Range 2004-2008 Avg 2004-2008 Range 2004-2008 Avg 2004-2008
2008 2009 actual 2008 2009 actual

In Italy, the 84 kb/d ENI refinery in Livorno restarted operations at the end of September, after unions
had blocked loading operations of cargoes in protest against possible job cuts. ENI’s crude runs in Italy
are reported 25% lower in the first nine months of 2009, versus a year ago, due to prolonged refinery
downtime prompted by weak market conditions.

OECD Pacific September crude runs were 0.1 mb/d above OECD Pacific
mb/d
Crude Throughput
expectations, with all countries in this region posting 8.0
higher runs. However, we have adjusted downward our 7.5
4Q09 projection by 0.2 mb/d, as products demand
7.0
continues to post annual declines, and increased runs in
6.5
non‐OECD countries, particularly China, are projected to
further depress OECD Pacific utilisation rates, particularly 6.0
in Japan. 4Q09 crude runs are now expected to average 5.5
6.1 mb/d, reaching 6.3 mb/d by December, on par with Jan Mar May Jul Sep Nov Jan
Range 2004-2008 Avg 2004-2008
September levels, but 0.7 mb/d below December 2008.
2008 2009 actual

Non-OECD Refinery Throughput
Non‐OECD crude throughput estimates for 3Q09 have been revised up by 0.3 mb/d to 36.8 mb/d as
August data were stronger than expected and September preliminary data were 0.6 mb/d ahead of
projections. This new estimate for 3Q09 represents a quarter‐on‐quarter increase of 1 mb/d and a
0.4 mb/d increase year‐on‐year. Should preliminary data be reasonably accurate, 3Q09 would represent
the first time crude throughput in non‐OECD countries is higher than that in OECD countries, on a
quarterly basis.

Chinese crude runs reached a new record level of 8.0 mb/d in September, 0.1 mb/d ahead of our
estimate, supported by the government‐guaranteed positive margins on domestic sales for state
companies. This new record level represents a monthly increase of 4% and a 16% increase year‐on‐year.
46 12 November 2009

However, our calculations show crack spreads in the region weakened in October, as crude oil gains
outpaced product price increases, which, as argued in last month’s report, may temper Chinese crude
runs if incremental products are exported at world oil market prices rather than sold domestically.
Furthermore, the seasonal dip in Chinese demand in 4Q09, currently estimated at 0.5 mb/d, may also
weigh on crude runs, despite the healthy domestic margin environment.

Indian throughputs were slightly ahead of our estimates in September. According to our calculations
based on industry reports, official Indian data continue to understate the true level of crude runs by
around 0.5 mb/d, representing crude processed at Reliance’s Jamnagar expansion. Elsewhere in Other
Asia, reported crude runs continued ahead of expectations, with Indonesia, Malaysia, Chinese Taipei and
Thailand once again performing better than expected. Accordingly, we have revised up our 4Q09 Other
Asia forecast by 0.4 mb/d to 8.6 mb/d.

mb/d China mb/d Russia

8.5 5.0
8.0
7.5
7.0 4.5
6.5
6.0 4.0
5.5
5.0
4.5 3.5
Range 2004-08 2009 Range 2004-08 2009
5 Year Average 2008 5 Year Average 2008

The grim situation of the global refining industry is providing Reliance, Essar and other Asian refining
companies with the opportunity to expand their presence in the US and Europe. Reliance is reportedly
looking to acquire assets worth several billion US dollars. News reports indicate that companies
including Valero, Sunoco and Flying J have been approached about potential US acquisitions. In Europe,
Royal Dutch Shell refineries are reported to be under consideration.

Russian crude runs averaged 4.7 mb/d in September, just below five‐year highs, as scheduled refinery
maintenance took place. Data provided by the Russian Ministry of Energy show September exports of
gasoline, gas oil and fuel oil decreased month‐on‐month, by 32.3%, 8.4% and 8.2%, while October
gasoline exports increased by 17.5% and decreased by 5.5% and 2.2% for gas oil and fuel oil, respectively.

As noted last month, the decision by Lukoil to stop operations at its Odessa refinery in Ukraine on
October 2 followed Ukrtransnafta’s reversal of the last leg of the Samara to Odessa pipeline, in order to
ensure the supply of oil to the Kremenchug refinery in Ukraine. Early November saw reports that the
Russian pipeline operator Transneft had started to supply oil along the Brody‐Odessa pipeline to the
Odessa refinery as of November 5, allowing this refinery to refine oil at previous operating rates.

OECD Refinery Yields
August refinery yields mainly followed production economics as depicted by crack spreads. Jet
fuel/kerosene yields fell counter‐seasonally as crack spreads mostly weakened across regions. Yields for
gasoline, gas oil/diesel and naphtha were higher, in line with a strengthening of their crack spreads. The
exception was fuel oil, whose yields increased in spite of wider discounts to crude.

Gasoline is the only product for which yields remained above the five‐year range, although, in absolute
terms, gasoline gross output only matched five‐year average levels at 15.0 mb/d, nonetheless it was
around 600 kb/d above last year’s level.
12 November 2009 47


OECD - Gasoline OECD - Gasoline
Refinery Yield - Five-year Range mb/d
Refinery Gross Output
36% 15.50
35% 15.00
34% 14.50
33% 14.00
32% 13.50
31% 13.00
2008
2009 2008 2009

Gasoil/diesel yields continued around their five‐year average level, with gross output increasing to
12.5 mb/d, 960 kb/d below last year’s level and 540 kb/d less than the five‐year average. Yields and
gross output for other products remained suppressed below their five‐year average.

OECD - Gasoil / Diesel OECD - Gasoil / Diesel
Refinery Yield - Five-year Range mb/d Refinery Gross Output
32% 14.00
31% 13.50
30%
13.00
29%
28% 12.50
27% 12.00
2008 2009
2008 2009

Fuel oil yields increased for the second consecutive month in spite of wider discounts to crude. Yields
increased in Europe and particularly in North America, where yields and gross output reached five‐year
averages. The increase may be related to the rationalisation of upgrading capacity, as coking
throughputs have been strongly hit by the economic slump (see Is It Always Darkest in the Hour Just
Before Dawn?).
OECD - Fuel Oil OECD N. America - Fuel Oil

Refinery Yield - Five-year Range Refinery Yield - Five-year Range
12% 6.5%
11% 6.0%
10% 5.5%
9% 5.0%
4.5%
8%
4.0%
7%
Jan Apr Jul Oct Jan
Jan Apr Jul Oct Jan
2008 2009 2008 2009

48 12 November 2009


Refining – Is It Always Darkest in the Hour Just Before Dawn?
The outlook for the global refining industry has seldom seemed gloomier, as refineries continue to struggle
against economic headwinds. While the cliché has it that it is always darkest in the hour just before dawn, in
reality it is darkest in the middle of the night. However, although the outlook for refineries is bleak, and in
the OECD particularly bleak, some necessary changes appear to be happening, which could herald, if not a
new dawn, then at least the passing of the darkest hour.
Historically, hydroskimming margins have averaged less than zero, suggesting that refinery profitability relies
less on the simple process of fractional distillation of crude and is more closely tied to upgrading margins.
However, the removal of significant volumes of heavy sour crude from the market have crushed the
light‐sweet/heavy sour spreads, reducing upgrading economics.

Upgrading Margins mb/d US Coking Throughput

$/bbl (Co king - Cracking in the US. Five-Year Range
Hydro cracking - Hydro skimming in A sia)
2.2
6 2.1
2.0
4
1.9
2 1.8
0 1.7
Source : EIA
1.6
-2
Jan 09 Mar 09 May 09 Jul 09 Sep 09
Range 2004-08 2009
USGC (Mars) Singapore (Dubai)
A verage 20024-08 2008

Furthermore, tight fuel oil markets, at least by historical standards, have further hampered refineries’
second source of additional profits, namely the reprocessing of relatively cheap residue into distillate and
gasoline through upgrading capacity. The bottom of the last profitability cycle in 2002 saw refineries
shutting crude units and simply feeding vacuum towers with residue in order to most profitably (or perhaps
least unprofitably) supply products to the market. Recent data from OECD countries suggest that current
markets have not allowed this opportunity for refineries to raise profitability. Hence, the two potential
sources of refining industry profitability over the past two decades have been temporarily removed.

mb/d US Hydrocracking Throughput mb/d US FCC Throughput

Five-Year Range Five-Year Range
1.4 6.0
1.3 5.5
1.2 5.0
1.1 4.5
Source : EIA
Source : EIA
1.0 4.0
Range 2004-08 2009 Range 2004-08 2008
A verage 2004-08 2008 Average 2004-08 2009

US data uniquely provides insights into refiners’ utilisation of upgrading units. Recent months’ data show
that catalytic cracking unit throughputs moved above the 2008 level. Given their bias towards gasoline
production, this perhaps points to the re‐emergence of gasoline as the binding constraint on US refining
activity. While encouraging, the continued weak premium for high quality gasoline components, such as
alkylate, and strong gasoline imports, continue to limit gasoline’s ability to restore refinery margins. By
contrast, weak hydrocracking and, more importantly, coking unit throughputs, demonstrate a response to
weak distillate markets and the narrowing of heavy sour crude discounts, suggesting refineries are adapting.
12 November 2009 49


Refining – Is It Always Darkest in the Hour Just Before Dawn? (continued)
Other changes revolve around the dramatic redrawing of global crude trade flows. US imports of Saudi
Arabian crude have collapsed from around 1.5 mb/d, to just over 700 kb/d. Similarly, US imports of Mexican
crude have plunged to around 1.0 mb/d in August, from a five year average level of 1.6 mb/d. Offsetting
these declines has been the rising volumes of Canadian crude imports and increasing variety of crudes, e.g.,
Russian Urals, which requires refineries to adapt to these new crudes.

mb/d US-Mexican Crude Im ports mb/d US-Saudi Arabia Crude Im ports

1.8 Five-Year Range 2.0 Five-Year Range
1.6
1.5
1.4
1.2
1.0
1.0
0.8 Source : EIA 0.5 Source : EIA
Range 2004-08 2009 Range 2004-08 2009
Average 2004-08 2008 Average 2004-08 2008

Furthermore, narrower fuel oil cracks have resulted in several changes to fuel oil markets. Firstly, OECD fuel
oil yields have ticked up, as noted elsewhere in this report, suggesting refineries are responding to shifting
product cracks. Secondly, above average FSU and Saudi fuel oil exports may help restore typical fuel oil
discounts, although the rise in condensate volumes may hamper such a move. Lastly, the start of
permanent, or at least semi‐permanent, refinery closures will begin to establish a ‘new normal’ in the
refining industry. Namely, that capacity rationalisation will accelerate in the coming quarters as
uncompetitive capacity is marginalised and shut down.

mb/d FSU mb/d Saudi Arabia

1.3 Fuel oil exports 0.3 Fuel oil exports
1.2
1.1 0.2
1.0
0.9 0.1
0.8
0.7 0.0
Range 2004-08 2009 Range 2004-08 2009
5 Year Average 2008 5 Year Average 2008

These factors in aggregate suggest that the industry is grappling with the outlook of persistently weak
profitability. It also highlights that some of the changes necessary to avoid the untenable imbalances highlighted
in the June 2009 Edition of the Medium‐Term Oil Market Report are indeed beginning to happen. While the
initial stages of the industry evolution to these changes are encouraging, more still needs to be done.

50 12 November 2009

I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT T ABLES
TABLES Table 1
WORLD OIL SUPPLY AND DEMAND
Table 1 - World Oil Supply and Demand(million barrels per day)
2006 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 3Q10 4Q10 2010
OECD DEMAND
North America 25.4 25.5 24.8 24.4 23.6 23.9 24.2 23.5 22.9 23.1 23.7 23.3 23.4 23.1 23.4 23.8 23.4
Europe 15.7 15.3 15.3 15.1 15.5 15.4 15.3 14.9 14.2 14.5 14.8 14.6 14.8 14.3 14.6 14.8 14.6
Pacific 8.5 8.4 8.9 7.9 7.5 8.0 8.1 8.1 7.3 7.2 7.7 7.6 8.0 7.1 7.1 7.5 7.4
Total OECD 49.5 49.2 49.0 47.4 46.7 47.3 47.6 46.6 44.4 44.8 46.2 45.5 46.2 44.5 45.1 46.1 45.5
NON-OECD DEMAND
FSU 4.0 4.1 4.3 4.1 4.3 4.2 4.2 4.0 3.9 4.1 4.1 4.0 4.1 4.0 4.2 4.2 4.1
Europe 0.7 0.8 0.8 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7
China 7.2 7.6 7.9 8.0 8.1 7.6 7.9 7.7 8.6 8.8 8.3 8.3 8.3 8.8 8.9 8.5 8.6
Other Asia 9.0 9.5 9.9 9.9 9.4 9.5 9.7 9.9 10.1 9.7 9.7 9.8 10.2 10.3 10.0 10.1 10.1
Latin America 5.4 5.7 5.7 6.0 6.0 5.9 5.9 5.8 6.0 6.1 6.0 6.0 6.0 6.2 6.3 6.2 6.2
Middle East 6.3 6.5 6.7 7.1 7.6 7.0 7.1 6.7 7.3 7.8 7.2 7.2 7.1 7.6 8.1 7.5 7.6
Africa 3.0 3.1 3.2 3.2 3.1 3.2 3.2 3.2 3.2 3.2 3.3 3.2 3.3 3.3 3.3 3.4 3.3
Total Non-OECD 35.7 37.3 38.5 39.0 39.3 38.1 38.7 38.0 39.7 40.3 39.2 39.3 39.8 41.0 41.4 40.6 40.7
1
Total Demand 85.3 86.5 87.5 86.4 85.9 85.4 86.3 84.6 84.2 85.1 85.5 84.8 86.0 85.5 86.5 86.7 86.2
OECD SUPPLY
North America4 14.2 14.3 14.2 14.0 13.6 13.8 13.9 14.2 13.9 14.1 14.2 14.1 14.4 14.1 13.9 14.3 14.2
Europe 5.3 5.0 4.9 4.8 4.5 4.8 4.8 4.9 4.5 4.2 4.3 4.5 4.3 4.0 3.9 4.1 4.1
Pacific 0.6 0.6 0.6 0.7 0.7 0.7 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8
Total OECD 20.1 19.9 19.7 19.5 18.8 19.3 19.3 19.7 19.0 19.0 19.2 19.2 19.4 18.9 18.6 19.2 19.0
NON-OECD SUPPLY
FSU 12.2 12.8 12.8 12.9 12.7 12.7 12.8 12.9 13.1 13.2 13.4 13.2 13.5 13.7 13.5 13.7 13.6
Europe 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
China 3.7 3.7 3.8 3.8 3.8 3.8 3.8 3.7 3.8 3.8 4.0 3.8 4.0 4.0 4.1 4.1 4.1
2
Other Asia 3.8 3.7 3.7 3.6 3.7 3.7 3.7 3.6 3.6 3.6 3.7 3.6 3.7 3.7 3.8 3.8 3.7
Latin America2,4 3.9 3.9 4.1 4.1 4.2 4.2 4.1 4.3 4.3 4.3 4.4 4.3 4.5 4.6 4.7 4.8 4.6
Middle East 1.8 1.7 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6 1.6
Africa2 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.4 2.5
Total Non-OECD 28.0 28.5 28.7 28.7 28.6 28.7 28.7 28.9 29.2 29.3 29.6 29.2 30.0 30.2 30.2 30.5 30.2
Processing Gains3 2.1 2.2 2.2 2.2 2.3 2.3 2.2 2.3 2.3 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2
Other Biofuels4 0.2 0.3 0.3 0.4 0.4 0.4 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5
Total Non-OPEC2 50.4 50.8 51.0 50.8 50.1 50.7 50.6 51.2 50.8 51.0 51.5 51.1 52.0 51.7 51.5 52.4 51.9
Non-OPEC: Historical Composition2 51.3 50.3 50.0 49.8 49.1 49.7 49.6 51.2 50.8 51.0 51.5 51.1 52.0 51.7 51.5 52.4 51.9
OPEC
Crude5 30.7 30.3 31.5 31.4 31.5 30.5 31.2 28.5 28.5 28.8
NGLs 4.4 4.5 4.6 4.6 4.7 4.8 4.7 4.8 4.9 5.2 5.3 5.0 5.4 5.7 5.9 6.2 5.8
Total OPEC2 35.2 34.9 36.1 36.0 36.2 35.3 35.9 33.3 33.4 34.0
OPEC: Historical Composition2 34.3 35.4 37.1 37.0 37.2 36.4 36.9 33.3 33.4 34.0
Total Supply6 85.6 85.7 87.1 86.8 86.3 86.0 86.5 84.5 84.2 85.0
STOCK CHANGES AND MISCELLANEOUS

Reported OECD
Industry 0.2 -0.3 0.1 0.4 0.6 0.5 0.4 0.5 0.1 0.2
Government 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.2 0.2 0.0
Total 0.3 -0.2 0.1 0.3 0.5 0.5 0.4 0.7 0.3 0.2
Floating Storage/Oil in Transit -0.1 0.0 0.3 0.0 -0.3 0.1 0.0 0.6 0.2 0.1
Miscellaneous to balance7 0.2 -0.6 -0.9 0.1 0.1 0.0 -0.2 -1.4 -0.5 -0.4
Total Stock Ch. & Misc 0.3 -0.8 -0.4 0.4 0.3 0.6 0.2 0.0 0.0 -0.2
Memo items:
Call on OPEC crude + Stock ch.8 30.4 31.2 32.0 31.0 31.2 29.9 31.0 28.6 28.5 29.0 28.6 28.7 28.6 28.2 29.2 28.1 28.5
Adjusted Call on OPEC + Stock ch.9 30.5 30.5 31.1 31.1 31.3 30.0 30.8 27.2 28.0 28.6 28.2 28.0 28.1 27.7 28.7 27.6 28.1
1 Measured as deliveries from refineries and primary stocks, comprises inland deliveries, international marine bunkers, refinery fuel, crude for direct burning,
oil from non-conventional sources and other sources of supply.
2 Other Asia includes Indonesia throughout. Latin America excludes Ecuador throughout. Africa excludes Angola throughout.
Total Non-OPEC excludes all countries that were members of OPEC at 1 January 2009. Non-OPEC Historical Composition excludes countries that were OPEC members at that point in time.
Total OPEC comprises all countries which were OPEC members at 1 January 2009. OPEC Historical Composition comprises countries which were OPEC members at that point in time.
3 Net volumetric gains and losses in the refining process (excludes net gain/loss in China and non-OECD Europe) and marine transportation losses.
4 Other Biofuels are from sources outside Brazil and US. North and Latin America oil supply totals include US and Brazilian ethanol.
5 As of the March 2006 OMR, Venezuelan Orinoco heavy crude production is included within Venezuelan crude estimates. Orimulsion fuel remains within the OPEC NGL &
non-conventional category, but Orimulsion production reportedly ceased from January 2007.
6 Comprises crude oil, condensates, NGLs, oil from non-conventional sources and other sources of supply.
7 Includes changes in non-reported stocks in OECD and non-OECD areas.
8 Equals the arithmetic difference between total demand minus total non-OPEC supply minus OPEC NGLs.
9 Equals the "Call on OPEC + Stock Ch." with "Miscellaneous to balance" added for historical periods and with an average of "Miscellaneous to balance" for the most recent 8 quarters added for forecast periods.
12 November 2009 51

T ABLES I NTERNATIONAL E NERGY A GENCY ‐ O IL M ARKET R EPORT

Table
Table 1a - World Oil Supply and Demand: 1A
Changes from Last Month’s Table 1
WORLD OIL SUPPLY AND DEMAND: CHANGES FROM LAST MONTH'S TABLE 1
2006 2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 3Q10 4Q10 2010
OECD DEMAND
North America - - - - - - - - - 0.3 0.2 0.1 - - - 0.2 -
Europe - - - - - - - - - -0.1 -0.1 -0.1 - - -0.1 -0.1 -
Pacific - - - - - - - - - - - - - - - 0.1 -
Total OECD - - - - - - - - - 0.1 0.2 0.1 - - -0.1 0.2 -
NON-OECD DEMAND
FSU - - - - - - - - - - - - - - - - -
Europe - - - - - - - - - - - - - - - - -
China - - - - - - - - - 0.2 - - - - 0.1 -0.1 -
Other Asia - - - - - - - - - 0.1 - - - - 0.1 - -
Latin America - - - - - - - - - - - - - - - - -
Middle East - - - - - - - - - 0.1 0.1 - - 0.2 0.2 - 0.1
Africa - - - - - - - - - - - - - - - - -
Total Non-OECD - - - - - - - - - 0.4 0.1 0.1 - 0.2 0.4 - 0.1
Total Demand - - - - - - - - - 0.5 0.3 0.2 - 0.2 0.3 0.2 0.1
OECD SUPPLY
North America - - - - - - - - - 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1
Europe - - - - - - - - - 0.1 0.1 - 0.1 0.1 0.1 0.1 0.1
Pacific - - - - - - - - - - - - - - - 0.1 -
Total OECD - - - - - - - - - 0.2 0.2 0.1 0.1 0.2 0.2 0.2 0.2
NON-OECD SUPPLY
FSU - - - - - - - - - - - - 0.1 0.1 0.1 0.1 0.1
Europe - - - - - - - - - - - - - - - - -
China - - - - - - - - - - - - - - - - -
Other Asia - - - - - - - - - - - - - - - - -
Latin America - - - - - - - - - - - - - - - - -
Middle East - - - - - - - - - - - - - - - - -
Africa - - - - - - - - - - - - - - - - -
Total Non-OECD - - - - - - - - - 0.1 0.1 - 0.1 0.1 0.1 0.2 0.1
Processing Gains - - - - - - - - - - - - - - - - -
Other Biofuels - - - - - - - - - - - - - - - - -
Total Non-OPEC - - - - - - - - - 0.3 0.3 0.1 0.3 0.3 0.3 0.5 0.3
Non-OPEC: historical composition - - - - - - - - - 0.3 0.3 0.1 0.3 0.3 0.3 0.5 0.3
OPEC
Crude - - - - - - - - - -
NGLs - - - - - - - -0.1 -0.1 -0.2 -0.2 -0.2 -0.3 -0.3 -0.3 -0.2 -0.3
Total OPEC - - - - - - - -0.1 -0.1 -0.2
OPEC: historical composition - - - - - - - -0.1 -0.1 -0.2
Total Supply - - - - - - - -0.1 -0.2 -
STOCK CHANGES AND MISCELLANEOUS

REPORTED OECD
Industry - - - - - - - - -
Government - - - - - - - - -
Total - - - - - - - - -
Floating Storage/Oil in Transit - - - - - - - - -
Miscellaneous to balance - - - - - - - -0.1 -0.2
Total Stock Ch. & Misc - - - - - - - -0.1 -0.2 -0.5
Memo items:
Call on OPEC crude + Stock ch. - - - - - - - 0.1 0.2 0.5 0.2 0.3 - 0.1 0.2 -0.1 0.1
Adjusted Call on OPEC + Stock ch. - - - - - - - - - 0.5 0.2 0.2 0.1 0.1 0.2 -0.1 0.1
When submitting their monthly oil statistics, OECD Member countries periodically update data for prior periods. Similar updates to non-OECD data can occur.
52 12 November 2009

Table 2 - Summary of Global Oil DemandTable 2

SUMMARY OF GLOBAL OIL DEMAND
2007 1Q08 2Q08 3Q08 4Q08 2008 1Q09 2Q09 3Q09 4Q09 2009 1Q10 2Q10 3Q10 4Q10 2010
Demand (mb/d)
North America 25.47 24.77 24.42 23.58 23.93 24.17 23.52 22.92 23.12 23.73 23.32 23.44 23.10 23.40 23.75 23.42
Europe 15.34 15.34 15.07 15.55 15.44 15.35 14.92 14.23 14.50 14.80 14.61 14.81 14.26 14.62 14.79 14.62
Pacific 8.37 8.91 7.86 7.54 7.97 8.07 8.14 7.30 7.22 7.72 7.59 7.96 7.13 7.08 7.55 7.43
Total OECD 49.18 49.02 47.36 46.67 47.34 47.59 46.58 44.44 44.85 46.25 45.53 46.20 44.50 45.10 46.08 45.47
Asia 17.11 17.82 17.85 17.49 17.10 17.56 17.58 18.67 18.47 18.01 18.19 18.54 19.18 18.82 18.60 18.79
Middle East 6.53 6.72 7.13 7.57 6.95 7.10 6.71 7.32 7.78 7.18 7.25 7.08 7.62 8.11 7.51 7.58
Latin America 5.69 5.71 5.97 6.04 5.93 5.91 5.77 5.96 6.10 5.99 5.95 5.95 6.17 6.28 6.20 6.15
FSU 4.15 4.27 4.12 4.33 4.15 4.22 3.98 3.86 4.08 4.08 4.00 4.15 4.01 4.22 4.20 4.15
Africa 3.07 3.19 3.19 3.14 3.22 3.18 3.23 3.21 3.15 3.26 3.21 3.35 3.32 3.26 3.37 3.33
Europe 0.77 0.76 0.74 0.72 0.74 0.74 0.72 0.73 0.71 0.71 0.72 0.74 0.74 0.72 0.73 0.73
Total Non-OECD 37.32 38.48 39.00 39.28 38.09 38.71 38.00 39.73 40.29 39.24 39.32 39.81 41.05 41.41 40.61 40.73
World 86.51 87.49 86.36 85.95 85.43 86.30 84.58 84.18 85.14 85.48 84.85 86.01 85.55 86.52 86.69 86.19
of which: US50 20.68 20.04 19.76 18.90 19.30 19.50 18.96 18.54 18.51 19.11 18.78 18.86 18.68 18.77 19.10 18.85
Europe 5* 9.48 9.50 9.29 9.50 9.57 9.47 9.41 8.85 8.90 9.06 9.06 9.22 8.79 8.92 9.02 8.99
China 7.57 7.88 7.98 8.09 7.62 7.89 7.65 8.61 8.81 8.29 8.34 8.31 8.83 8.85 8.55 8.64
Japan 5.04 5.45 4.63 4.34 4.71 4.78 4.72 4.03 4.05 4.39 4.30 4.54 3.85 3.91 4.22 4.13
India 3.00 3.25 3.18 2.97 3.14 3.13 3.40 3.35 3.11 3.21 3.26 3.49 3.44 3.21 3.32 3.36
Russia 2.89 2.94 2.88 3.09 2.88 2.95 2.72 2.66 2.87 2.83 2.77 2.85 2.79 2.99 2.93 2.89
Brazil 2.35 2.37 2.46 2.53 2.51 2.47 2.39 2.48 2.57 2.52 2.49 2.48 2.57 2.65 2.62 2.58
Saudi Arabia 2.17 2.22 2.47 2.71 2.27 2.42 2.23 2.78 3.02 2.48 2.63 2.43 2.88 3.12 2.60 2.76
Canada 2.31 2.31 2.19 2.26 2.26 2.26 2.20 2.08 2.22 2.25 2.19 2.22 2.13 2.26 2.28 2.22
Korea 2.24 2.35 2.11 2.10 2.14 2.17 2.34 2.17 2.07 2.20 2.19 2.32 2.16 2.05 2.19 2.18
Mexico 2.14 2.12 2.19 2.14 2.07 2.13 2.05 2.01 2.10 2.06 2.06 2.04 2.02 2.07 2.05 2.05
Iran 1.72 1.86 1.89 1.86 1.83 1.86 1.77 1.73 1.74 1.81 1.76 1.85 1.84 1.85 1.92 1.86
Total 61.58 62.28 61.05 60.49 60.30 61.03 59.85 59.31 59.97 60.23 59.84 60.59 59.98 60.67 60.81 60.51
% of World 71.2% 71.2% 70.7% 70.4% 70.6% 70.7% 70.8% 70.5% 70.4% 70.5% 70.5% 70.4% 70.1% 70.1% 70.1% 70.2%
Annual Change (% per annum)
North America 0.4 -3.3 -3.6 -7.5 -5.9 -5.1 -5.1 -6.2 -1.9 -0.8 -3.5 -0.4 0.8 1.2 0.1 0.4
Europe -2.1 0.7 0.7 0.5 -1.6 0.1 -2.7 -5.6 -6.7 -4.1 -4.8 -0.7 0.2 0.8 -0.1 0.1
Pacific -1.0 0.0 -0.6 -4.9 -8.9 -3.6 -8.6 -7.2 -4.2 -3.2 -5.9 -2.3 -2.3 -1.9 -2.2 -2.2
Total OECD -0.7 -1.5 -1.8 -4.5 -5.1 -3.2 -5.0 -6.1 -3.9 -2.3 -4.3 -0.8 0.1 0.6 -0.3 -0.1
Asia 5.1 5.7 2.8 3.5 -1.4 2.6 -1.3 4.6 5.6 5.3 3.5 5.5 2.8 1.9 3.3 3.3
Middle East 3.2 4.9 9.2 12.4 7.6 8.6 -0.2 2.6 2.8 3.2 2.2 5.5 4.2 4.2 4.6 4.6
Latin America 5.5 4.8 5.2 4.0 1.8 3.9 0.9 -0.1 0.9 1.1 0.7 3.2 3.7 3.1 3.4 3.3
FSU 2.7 3.2 4.5 2.9 -3.7 1.6 -6.8 -6.4 -5.7 -1.7 -5.2 4.3 3.9 3.5 3.0 3.7
Africa 4.0 3.1 5.4 4.0 2.6 3.7 1.2 0.5 0.6 1.3 0.9 3.6 3.6 3.4 3.5 3.5
Europe 3.6 0.3 -0.4 -7.3 -5.2 -3.3 -5.1 -1.7 -1.3 -3.9 -3.0 1.5 1.7 2.0 2.1 1.8
Total Non-OECD 4.4 4.8 4.6 4.9 0.6 3.7 -1.2 1.9 2.6 3.0 1.6 4.8 3.3 2.8 3.5 3.6
World 1.5 1.2 1.0 -0.4 -2.6 -0.2 -3.3 -2.5 -0.9 0.1 -1.7 1.7 1.6 1.6 1.4 1.6
Annual Change (mb/d)
North America 0.09 -0.85 -0.92 -1.91 -1.50 -1.30 -1.25 -1.51 -0.46 -0.20 -0.85 -0.08 0.19 0.28 0.02 0.10
Europe -0.34 0.11 0.11 0.08 -0.26 0.01 -0.42 -0.84 -1.04 -0.64 -0.74 -0.11 0.03 0.12 -0.01 0.01
Pacific -0.09 0.00 -0.05 -0.39 -0.78 -0.30 -0.77 -0.56 -0.32 -0.26 -0.48 -0.19 -0.17 -0.14 -0.17 -0.17
Total OECD -0.33 -0.73 -0.86 -2.22 -2.54 -1.59 -2.44 -2.91 -1.82 -1.10 -2.06 -0.38 0.05 0.26 -0.16 -0.06
Asia 0.83 0.96 0.49 0.60 -0.25 0.45 -0.23 0.82 0.98 0.91 0.62 0.96 0.51 0.35 0.59 0.60
Middle East 0.20 0.32 0.60 0.84 0.49 0.56 -0.01 0.18 0.21 0.22 0.15 0.37 0.31 0.33 0.33 0.33
Latin America 0.30 0.26 0.30 0.23 0.10 0.22 0.05 -0.01 0.05 0.07 0.04 0.19 0.22 0.19 0.20 0.20
FSU 0.11 0.13 0.18 0.12 -0.16 0.07 -0.29 -0.27 -0.25 -0.07 -0.22 0.17 0.15 0.14 0.12 0.15
Africa 0.12 0.10 0.16 0.12 0.08 0.11 0.04 0.02 0.02 0.04 0.03 0.12 0.12 0.11 0.11 0.11
Europe 0.03 0.00 0.00 -0.06 -0.04 -0.02 -0.04 -0.01 -0.01 -0.03 -0.02 0.01 0.01 0.01 0.02 0.01
Total Non-OECD 1.59 1.77 1.73 1.85 0.23 1.39 -0.48 0.73 1.01 1.14 0.61 1.82 1.32 1.12 1.37 1.41
World 1.26 1.03 0.86 -0.37 -2.32 -0.20 -2.92 -2.18 -0.81 0.05 -1.46 1.44 1.37 1.38 1.21 1.35
Revisions to Oil Demand from Last Month's Report (mb/d)
North America 0.00 0.00 0.00 -0.02 0.00 0.00 0.00 0.02 0.29 0.25 0.14 -0.01 -0.02 -0.02 0.19 0.04
Europe 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 -0.15 -0.11 -0.06 0.00 0.01 -0.11 -0.08 -0.05
Pacific 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.02 0.03 0.00 0.02 0.00 0.02 0.05 0.02
Total OECD 0.00 0.00 0.00 -0.02 0.00 0.00 0.00 0.03 0.12 0.16 0.08 0.01 -0.01 -0.12 0.17 0.01
Asia 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.25 0.01 0.07 -0.04 -0.01 0.15 -0.06 0.01
Middle East 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.10 0.08 0.05 0.03 0.16 0.17 0.04 0.10
Latin America 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.03 0.02 0.01 -0.01 0.00 0.02 0.01 0.01
FSU 0.00 0.00 0.00 0.00 -0.01 0.00 0.00 0.02 -0.01 0.01 0.00 0.01 0.01 0.00 0.00 0.01
Africa 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.01 0.03 0.00 0.01 0.00 -0.01 0.03 0.00 0.01
Europe 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Non-OECD 0.00 0.00 0.00 0.01 -0.01 0.00 0.01 0.02 0.40 0.12 0.14 0.00 0.16 0.37 0.00 0.13
World 0.00 0.00 0.00 -0.01 -0.01 -0.01 0.01 0.05 0.52 0.28 0.22 0.00 0.15 0.25 0.17 0.14
Revisions to Oil Demand Growth from Last Month's Report (mb/d)
World 0.00 0.00 0.01 -0.01 -0.01 0.00 0.01 0.05 0.53 0.29 0.22 0.00 0.10 -0.27 -0.11 -0.07
* France, Germany, Italy, Spain & UK
12 November 2009 53


Table 3
Table 3 - World Oil Production WORLD OIL PRODUCTION
2008 2009 2010 2Q09 3Q09 4Q09 1Q10 2Q10 Aug 09 Sep 09 Oct 09
OPEC
Crude Oil
Saudi Arabia 8.90 7.91 7.94 7.93 7.92 7.93
Iran 3.90 3.72 3.77 3.80 3.70 3.65
Iraq 2.38 2.45 2.55 2.56 2.51 2.47
UAE 2.59 2.25 2.27 2.27 2.27 2.29
Kuwait 2.31 1.98 1.97 1.97 1.96 2.00
Neutral Zone 0.57 0.54 0.54 0.54 0.54 0.54
Qatar 0.85 0.77 0.76 0.76 0.76 0.78
Angola 1.85 1.71 1.80 1.79 1.86 1.90
Nigeria 1.95 1.77 1.76 1.74 1.85 1.90
Libya 1.72 1.53 1.55 1.55 1.55 1.55
Algeria 1.37 1.25 1.22 1.22 1.22 1.24
Ecuador 0.50 0.48 0.46 0.46 0.46 0.46
Venezuela 2.35 2.12 2.20 2.21 2.24 2.24
Total Crude Oil6 31.24 28.48 28.80 28.80 28.84 28.95
Total NGLs1,6 4.66 5.04 5.80 4.92 5.17 5.31 5.41 5.68 5.17 5.17 5.31
6
Total OPEC 35.90 33.40 33.97 33.97 34.01 34.26
OPEC: Historical Composition6 36.93 33.40 33.97 33.97 34.01 34.26
2
NON-OPEC
OECD
North America 13.91 14.10 14.16 13.87 14.13 14.22 14.41 14.09 14.08 14.18 14.13
United States5 7.52 8.02 8.21 7.97 8.08 8.20 8.24 8.26 8.08 8.14 8.15
Mexico 3.16 2.95 2.79 2.97 2.94 2.88 2.85 2.81 2.92 2.96 2.89
Canada 3.22 3.13 3.16 2.93 3.11 3.14 3.32 3.02 3.08 3.08 3.10
Europe 4.76 4.47 4.08 4.48 4.21 4.33 4.29 3.98 4.00 4.05 4.34
UK 1.56 1.48 1.35 1.56 1.28 1.47 1.48 1.35 1.07 1.29 1.44
Norway 2.46 2.33 2.08 2.27 2.27 2.20 2.16 1.99 2.26 2.11 2.24
Others 0.74 0.67 0.65 0.66 0.66 0.66 0.65 0.65 0.68 0.65 0.65
Pacific 0.65 0.65 0.78 0.62 0.66 0.69 0.72 0.78 0.66 0.66 0.68
Australia 0.55 0.55 0.66 0.53 0.55 0.57 0.60 0.66 0.56 0.56 0.56
Others 0.10 0.10 0.12 0.09 0.10 0.12 0.12 0.12 0.11 0.11 0.11
Total OECD 19.32 19.23 19.02 18.97 18.99 19.23 19.42 18.86 18.74 18.90 19.15
NON-OECD
Former USSR 12.77 13.17 13.60 13.13 13.24 13.40 13.51 13.69 13.22 13.26 13.32
Russia 10.00 10.14 10.26 10.10 10.20 10.28 10.27 10.28 10.19 10.27 10.27
Others 2.77 3.02 3.34 3.03 3.04 3.11 3.23 3.40 3.03 2.99 3.05
Asia 7.47 7.48 7.80 7.42 7.48 7.63 7.73 7.74 7.49 7.50 7.63
China 3.79 3.83 4.05 3.80 3.84 3.98 4.03 4.02 3.86 3.84 3.97
Malaysia 0.76 0.73 0.70 0.72 0.73 0.72 0.71 0.71 0.72 0.73 0.72
India 0.81 0.80 0.87 0.80 0.79 0.82 0.84 0.86 0.79 0.79 0.81
Indonesia 1.03 1.01 1.03 1.00 1.01 1.01 1.01 1.03 1.00 1.01 1.00
Others 1.08 1.11 1.13 1.11 1.12 1.11 1.13 1.13 1.13 1.13 1.13
Europe 0.14 0.13 0.12 0.13 0.13 0.13 0.13 0.12 0.13 0.13 0.13
Latin America 4.14 4.34 4.64 4.34 4.33 4.38 4.54 4.59 4.29 4.38 4.38
Brazil5 2.37 2.50 2.72 2.50 2.51 2.51 2.64 2.68 2.52 2.53 2.51
Argentina 0.75 0.74 0.75 0.75 0.71 0.74 0.76 0.75 0.66 0.74 0.74
Colombia 0.59 0.66 0.73 0.66 0.66 0.68 0.70 0.72 0.67 0.67 0.68
Others 0.42 0.44 0.44 0.43 0.44 0.44 0.44 0.44 0.44 0.44 0.44
3
Middle East 1.65 1.63 1.61 1.64 1.64 1.60 1.60 1.61 1.67 1.60 1.60
Oman 0.75 0.80 0.84 0.80 0.82 0.80 0.81 0.83 0.85 0.79 0.79
Syria 0.39 0.36 0.33 0.37 0.36 0.35 0.34 0.33 0.36 0.36 0.35
Yemen 0.31 0.27 0.26 0.27 0.26 0.26 0.26 0.26 0.26 0.26 0.26
Others 0.19 0.19 0.18 0.19 0.19 0.19 0.18 0.18 0.19 0.19 0.19
Africa 2.53 2.49 2.46 2.50 2.50 2.47 2.48 2.46 2.50 2.49 2.44
Egypt 0.65 0.63 0.60 0.64 0.63 0.62 0.61 0.61 0.63 0.63 0.62
Gabon 0.21 0.23 0.24 0.22 0.23 0.24 0.24 0.24 0.24 0.24 0.24
Others 1.67 1.63 1.62 1.64 1.63 1.60 1.62 1.61 1.64 1.62 1.58
Total Non-OECD 28.69 29.24 30.23 29.15 29.32 29.60 29.98 30.21 29.30 29.36 29.50
Processing Gains4 2.24 2.29 2.20 2.29 2.29 2.29 2.20 2.20 2.29 2.29 2.29
Other Biofuels5 0.38 0.39 0.46 0.38 0.42 0.41 0.42 0.43 0.42 0.43 0.41
6
TOTAL NON-OPEC 50.64 51.14 51.91 50.79 51.02 51.53 52.03 51.70 50.75 50.97 51.35
Non-OPEC: Historical Composition6 49.61 51.14 51.91 50.79 51.02 51.53 52.03 51.70 50.75 50.97 51.35
TOTAL SUPPLY 86.54 84.19 84.99 84.71 84.98 85.61
1 Includes condensates reported by OPEC countries, oil from non-conventional sources, e.g. Venezuelan Orimulsion (but not Orinoco extra-heavy oil),
and non-oil inputs to Saudi Arabian MTBE. Orimulsion production reportedly ceased from January 2007.
2 Comprises crude oil, condensates, NGLs and oil from non-conventional sources
3 Includes small amounts of production from Israel, Jordan and Bahrain.
4 Net volumetric gains and losses in refining (excludes net gain/loss in China and non-OECD Europe) and marine transportation losses.
5 Other Biofuels are from sources outside Brazil and US. US and Brazil oil supply include ethanol.
6 Total OPEC comprises all countries which were OPEC members at 1 January 2009. OPEC Historical Composition comprises countries which were OPEC members at that point in time.
Total Non-OPEC excludes all countries that were OPEC members at 1 January 2009. Non-OPEC Historical Composition excludes countries that were OPEC members at that point in time.
54 12 November 2009


Table 4
Table 4 - OECD Industry Stocks and 1
Quarterly Stock Changes/OECD Government-
OECD
Controlled Stocks andINDUSTRY
QuarterlySTOCKS AND QUARTERLY STOCK CHANGES
Stock Changes
2 2
RECENT MONTHLY STOCKS PRIOR YEARS' STOCKS STOCK CHANGES
in Million Barrels in Million Barrels in mb/d
May2009 Jun2009 Jul2009 Aug2009 Sep2009* Sep2006 Sep2007 Sep2008 4Q2008 1Q2009 2Q2009 3Q2009
North America
Crude 510.6 497.0 498.0 481.6 480.2 461.2 449.8 453.2 0.16 0.49 -0.15 -0.18
Motor Gasoline 236.4 243.7 238.5 235.1 242.8 244.1 227.8 218.1 0.27 0.06 -0.05 -0.01
Middle Distillate 229.5 234.1 236.2 241.3 248.5 224.3 207.2 197.1 0.22 0.00 0.19 0.16
Residual Fuel Oil 46.9 44.7 43.1 41.4 42.8 53.0 44.3 47.5 -0.04 0.03 -0.03 -0.02
3
Total Products 705.6 723.9 724.3 726.6 741.5 723.6 672.1 654.4 0.32 0.02 0.42 0.19
4
Total 1376.8 1382.9 1386.8 1372.2 1383.8 1351.3 1285.2 1278.2 0.25 0.53 0.39 0.01
Europe
Crude 330.2 343.0 338.9 339.0 337.7 329.5 321.5 333.1 0.10 0.15 -0.14 -0.06
Motor Gasoline 98.0 99.3 96.9 97.5 99.2 102.6 103.7 98.3 0.11 -0.07 -0.03 0.00
Middle Distillate 290.3 282.3 287.3 300.1 291.1 262.8 250.8 265.3 0.11 0.02 0.06 0.10
Residual Fuel Oil 82.7 80.7 68.8 72.9 71.9 71.9 77.7 74.7 0.08 -0.05 0.03 -0.10
3
Total Products 576.6 566.0 557.2 578.2 571.0 545.2 537.4 548.2 0.31 -0.13 0.01 0.05
4
Total 976.5 976.4 965.2 986.5 978.9 947.9 932.5 951.5 0.46 -0.02 -0.17 0.03
Pacific
Crude 155.8 170.2 171.1 165.4 158.2 177.2 163.4 162.1 0.01 0.08 0.00 -0.13
Motor Gasoline 27.0 26.1 23.8 24.2 25.2 23.5 21.7 22.7 -0.02 0.06 0.00 -0.01
Middle Distillate 65.2 62.3 67.2 71.4 73.1 86.0 77.7 74.3 -0.10 -0.09 0.06 0.12
Residual Fuel Oil 20.6 18.9 19.3 21.8 21.3 23.8 25.6 22.3 -0.02 0.00 -0.01 0.03
3
Total Products 171.2 164.8 170.1 182.8 185.1 210.9 196.8 192.9 -0.20 -0.07 -0.05 0.22
4
Total 397.5 401.0 407.3 414.1 411.7 461.0 432.2 430.7 -0.25 0.01 -0.08 0.12
Total OECD
Crude 996.6 1010.2 1008.0 985.9 976.1 967.8 934.7 948.4 0.27 0.72 -0.28 -0.37
Motor Gasoline 361.4 369.1 359.2 356.7 367.2 370.1 353.2 339.1 0.36 0.05 -0.09 -0.02
Middle Distillate 585.0 578.7 590.6 612.9 612.8 573.1 535.6 536.7 0.22 -0.07 0.30 0.37
Residual Fuel Oil 150.2 144.3 131.1 136.0 136.0 148.7 147.6 144.5 0.02 -0.01 -0.01 -0.09
3
Total Products 1453.4 1454.7 1451.6 1487.6 1497.7 1479.6 1406.4 1395.5 0.44 -0.17 0.38 0.47
4
Total 2750.9 2760.2 2759.3 2772.7 2774.3 2760.1 2650.0 2660.4 0.45 0.52 0.14 0.15
OECD GOVERNMENT-CONTROLLED STOCKS5 AND QUARTERLY STOCK CHANGES

2 2
RECENT MONTHLY STOCKS PRIOR YEARS' STOCKS STOCK CHANGES
in Million Barrels in Million Barrels in mb/d
May2009 Jun2009 Jul2009 Aug2009 Sep2009* Sep2006 Sep2007 Sep2008 4Q2008 1Q2009 2Q2009 3Q2009
North America
Crude 721.7 724.1 724.1 724.1 725.1 687.8 692.8 702.4 -0.01 0.12 0.12 0.01
Products 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 0.00 0.00 0.00 0.00
Europe
Crude 186.6 186.7 185.6 186.1 186.1 175.5 177.4 180.4 0.07 0.01 -0.01 -0.01
Products 238.7 238.3 239.5 240.5 240.5 235.1 244.2 233.1 -0.05 0.06 0.05 0.02
Pacific
Crude 388.8 389.1 388.5 388.5 388.5 381.5 385.1 384.3 0.03 0.02 0.00 -0.01
Products 19.2 19.2 19.2 19.2 19.2 11.8 17.9 19.2 0.00 0.00 0.00 0.00
Total OECD
Crude 1297.1 1299.9 1298.1 1298.7 1299.7 1244.8 1255.2 1267.0 0.10 0.16 0.11 0.00
Products 259.9 259.5 260.7 261.7 261.7 249.0 264.0 254.2 -0.05 0.06 0.05 0.02
4
Total 1558.5 1561.0 1560.6 1562.1 1563.1 1494.8 1520.2 1522.2 0.05 0.23 0.15 0.02
* estimated
1 Stocks are primary national territory stocks on land (excluding utility stocks and including pipeline and entrepot stocks where known) and include stocks held by
industry to meet IEA, EU and national emergency reserve commitments and are subject to government control in emergencies.
2 Closing stock levels.
3 Total products includes gasoline, middle distillates, fuel oil and other products.
4 Total includes NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons.
5 Includes government-owned stocks and stock holding organisation stocks held for emergency purposes.
12 November 2009 55


Table 5
Table 5 - Total Stocks on Land in OECD Countries/Total OECD Stocks
1
TOTAL STOCKS ON LAND IN OECD COUNTRIES
('millions of barrels' and 'days')
3
End September 2008 End December 2008 End March 2009 End June 2009 End September 2009
Stock Days Fwd2 Stock Days Fwd Stock Days Fwd Stock Days Fwd Stock Days Fwd
Level Demand Level Demand Level Demand Level Demand Level Demand
North America
Canada 198.4 88 193.9 88 197.7 95 197.8 - - -
Mexico 55.7 27 50.3 25 45.5 23 48.1 - - -
4
United States 1706.4 88 1738.7 92 1797.0 97 1841.0 - - -
4
Total 1982.6 83 2005.1 86 2062.3 90 2108.9 91 2110.9 89
Pacific
Australia 38.9 40 41.4 45 40.8 43 40.5 - - -
Japan 646.2 137 629.6 133 611.3 152 611.2 - - -
Korea 141.2 66 134.9 58 155.2 72 149.1 - - -
New Zealand 7.9 53 7.9 51 9.5 61 8.5 - - -
Total 834.1 105 813.8 100 816.8 112 809.3 112 819.3 106
5
Europe
Austria 21.5 79 23.2 82 20.9 78 20.4 - - -
Belgium 31.1 43 34.9 56 35.8 65 35.0 - - -
Czech Republic 19.1 97 21.4 114 22.7 111 22.0 - - -
Denmark 18.3 101 22.9 131 25.1 152 26.4 - - -
Finland 30.1 139 30.7 147 33.5 167 25.4 - - -
France 176.6 87 179.2 89 177.6 98 172.9 - - -
Germany 273.7 103 277.4 108 277.7 116 280.2 - - -
Greece 39.2 83 40.0 83 36.7 93 35.9 - - -
Hungary 15.5 93 15.0 100 15.7 100 15.1 - - -
Ireland 10.5 54 11.4 63 11.5 74 11.7 - - -
Italy 130.3 81 127.9 83 131.0 86 129.1 - - -
Luxembourg 0.6 10 0.7 14 0.7 14 0.8 - - -
Netherlands 115.0 117 131.4 130 133.9 139 144.4 - - -
Norway 26.5 127 29.9 143 24.0 108 23.6 - - -
Poland 58.8 106 58.1 119 58.9 111 63.1 - - -
Portugal 25.0 90 24.7 92 25.0 90 24.8 - - -
Slovak Republic 8.0 93 8.8 122 9.8 123 8.4 - - -
Spain 135.8 88 137.6 89 137.8 94 135.6 - - -
Sweden 36.6 104 38.7 119 40.7 127 39.5 - - -
Switzerland 37.8 127 36.3 120 36.8 133 38.0 - - -
Turkey 60.8 98 60.9 111 59.2 97 58.8 - - -
United Kingdom 95.1 55 98.8 57 100.4 60 91.7 - - -
Total 1365.9 88 1409.9 94 1415.3 99 1403.0 97 1407.2 95
Total OECD 4182.6 88 4228.8 91 4294.4 97 4321.2 96 4337.4 94
6
DAYS OF IEA Net Imports - 124 - 131 - 134 - 135 - -
1 Total Stocks are industry and government-controlled stocks (see breakdown in table below). Stocks are primary national territory stocks on land (excluding utility stocks
and including pipeline and entrepot stocks where known) they include stocks held by industry to meet IEA, EU and national emergency reserves commitments and are
subject to government control in emergencies.
2 Note that days of forward demand represent the stock level divided by the forward quarter average daily demand and is very different from the days of net
imports used for the calculation of IEA Emergency Reserves.
3 End June 2009 and September 2009 forward demand figures are IEA Secretariat forecasts.
4 US figures exclude US territories. Total includes US territories.
5 Data not available for Iceland.
6 Reflects stock levels and prior calendar year’s net imports adjusted to IEA emergency reserve definitions (see www.iea.org/netimports.asp). Net exporting IEA countries are excluded.
TOTAL OECD STOCKS

CLOSING STOCKS Total Government1 Industry Total Government1 Industry
controlled controlled
Millions of Barrels Days of Fwd. Demand 2
3Q2006 4255 1495 2760 85 30 55

4Q2006 4166 1499 2667 84 30 54
1Q2007 4105 1507 2598 85 31 54
2Q2007 4164 1506 2658 85 31 54
3Q2007 4170 1520 2650 83 30 53
4Q2007 4091 1524 2567 83 31 52
1Q2008 4102 1529 2573 86 32 54
2Q2008 4133 1526 2607 88 33 56
3Q2008 4183 1522 2660 88 32 56
4Q2008 4229 1527 2702 91 33 58
1Q2009 4294 1547 2747 97 35 62
2Q2009 4321 1561 2760 96 35 62
3Q2009 4337 1563 2774 94 34 60
1 Includes government-owned stocks and stock holding organisation stocks held for emergency purposes.
2 Days of forward demand calculated using actual demand except in 2Q2009 and 3Q2009 (when latest forecasts are used).
56 12 November 2009


Table 6
Table 6 - IEA Member Country Destinations of Selected Crude Streams1
IEA Member Country Destinations of Selected Crude Streams
Year Earlier
2006 2007 2008 3Q08 4Q08 1Q09 2Q09 Jun 09 Jul 09 Aug 09 Aug 08 change
Saudi Light & Extra Light

North America 0.60 0.73 0.70 0.71 0.63 0.58 0.51 0.45 0.56 0.36 0.60 -0.24
Europe 0.78 0.70 0.70 0.81 0.66 0.57 0.60 0.54 0.66 0.43 0.85 -0.42
Pacific 1.32 1.19 1.22 1.10 1.24 1.40 1.16 1.18 1.30 1.20 1.08 0.13
Saudi Medium
North America 0.64 0.56 0.64 0.68 0.66 0.42 0.45 0.48 0.44 0.34 0.61 -0.27
Europe 0.14 0.05 0.05 0.03 0.05 0.03 0.02 0.02 0.02 - 0.01 -
Pacific 0.35 0.34 0.39 0.40 0.38 0.34 0.33 0.35 0.39 0.30 0.38 -0.09
Saudi Heavy
North America 0.21 0.09 0.07 0.14 0.05 0.04 0.02 0.02 0.02 0.02 - -
Europe 0.18 0.11 0.09 0.12 0.09 0.03 0.03 0.04 0.00 0.01 0.14 -0.13
Pacific 0.23 0.20 0.24 0.26 0.25 0.22 0.15 0.16 0.13 0.12 0.22 -0.10
2
Iraqi Basrah Light
North America 0.52 0.50 0.60 0.57 0.51 0.44 0.31 0.34 0.32 0.56 0.59 -0.03
Europe 0.32 0.30 0.21 0.23 0.21 0.13 0.12 0.16 0.20 0.30 0.24 0.06
Pacific 0.08 0.17 0.15 0.18 0.11 0.26 0.20 0.22 0.21 0.31 0.10 0.21
Iraqi Kirkuk
North America 0.00 - 0.08 0.10 0.06 0.07 0.02 0.03 0.13 0.07 0.13 -0.06
Europe 0.01 0.11 0.23 0.24 0.19 0.26 0.34 0.34 0.44 0.24 0.26 -0.02
Pacific - - - - - - - - - - - -
Iranian Light
North America - - - - - - - - - - - -
Europe 0.26 0.27 0.23 0.21 0.24 0.15 0.16 0.19 0.05 0.17 0.20 -0.03
Pacific 0.13 0.09 0.08 0.06 0.07 0.11 0.06 0.02 0.08 0.06 0.07 -0.01
3
Iranian Heavy
North America - - - - - - - - - - - -
Europe 0.58 0.56 0.49 0.60 0.43 0.33 0.41 0.44 0.51 0.48 0.65 -0.17
Pacific 0.56 0.64 0.61 0.67 0.64 0.65 0.51 0.50 0.56 0.57 0.74 -0.17
Venezuelan Light & Medium

North America 0.66 0.76 0.62 0.67 0.50 0.51 0.63 0.68 0.42 0.40 0.73 -0.33
Europe 0.11 0.08 0.06 0.06 0.07 0.07 0.13 0.10 0.08 0.01 0.11 -0.09
Pacific - 0.01 - - - - - - - - - -
Venezuelan 22 API and heavier

North America 0.72 0.68 0.65 0.67 0.74 0.74 0.62 0.70 0.74 0.88 0.67 0.21
Europe 0.06 0.07 0.07 0.07 0.08 0.07 0.06 0.05 0.06 0.08 0.11 -0.03
Pacific - - - - - - - - - - - -
Mexican Maya
North America 1.24 1.22 1.02 0.99 1.04 1.06 0.96 0.91 0.83 0.92 1.13 -0.21
Europe 0.16 0.14 0.14 0.14 0.12 0.08 0.09 0.12 0.10 0.08 0.16 -0.09
Pacific - - - - - - - - - - - -
Mexican Isthmus
North America 0.04 0.01 0.01 0.01 0.00 0.01 0.00 - 0.01 0.01 0.01 0.00
Europe 0.01 0.02 0.01 - 0.02 0.01 - - 0.03 0.03 - -
Pacific - - - - - - - - - - - -
Russian Urals
North America 0.09 0.06 0.05 0.10 - 0.09 0.27 0.21 0.20 0.12 0.14 -0.02
Europe 1.68 1.86 1.81 1.74 1.67 1.58 1.76 1.65 1.86 1.60 1.77 -0.17
Pacific 0.00 0.00 - - - - - - - - - -
Nigerian Light4
North America 0.79 0.88 0.68 0.52 0.60 0.47 0.40 0.58 0.64 0.65 0.66 -0.01
Europe 0.33 0.24 0.29 0.33 0.34 0.25 0.39 0.36 0.42 0.33 0.29 0.04
Pacific 0.04 0.01 - - - - 0.01 0.04 - - - -
Nigerian Medium
North America 0.17 0.23 0.27 0.26 0.22 0.14 0.30 0.36 0.28 0.13 0.43 -0.30
Europe 0.10 0.07 0.14 0.13 0.14 0.12 0.12 0.16 0.09 0.07 0.16 -0.09
Pacific 0.00 0.01 - - - - - - - - - -
1 Data based on monthly submissions from IEA countries to the crude oil import register (in '000 bbl), subject to availability. May differ from Table 8 of the Report.
IEA North America includes United States and Canada.
IEA Europe includes all countries in OECD Europe except Hungary. The Slovak Republic and Poland is excluded through December 2007 but included thereafter.
IEA Pacific data includes Australia, New Zealand, Korea and Japan.
2 Iraqi Total minus Kirkuk.
3 Iranian Total minus Iranian Light.
4 33 API and lighter (e.g., Bonny Light, Escravos, Qua Iboe and Oso Condensate).
12 November 2009 57

Table 7 - Regional OECD Imports Table 7

Regional OECD Imports1,2
(thousand barrels per day)
Year Earlier
2006 2007 2008 3Q08 4Q08 1Q09 2Q09 Jun-09 Jul-09 Aug-09 Aug-08 % change
Crude Oil
North America 8194 8214 8046 7905 7886 7743 7541 7462 7507 6954 8034 -13%
Europe 9784 9684 9772 9977 9524 9001 9132 9393 8918 8633 9801 -12%
Pacific 6816 6718 6605 6460 6408 6559 5706 6041 5829 6034 6530 -8%
Total OECD 24794 24615 24423 24342 23819 23304 22379 22895 22254 21621 24682 -12%
LPG
North America 14 28 29 38 34 28 11 0 5 22 31 -29%
Europe 264 276 268 277 241 251 250 280 285 220 289 -24%
Pacific 578 557 589 582 543 504 518 575 501 544 558 -2%
Total OECD 856 861 885 897 818 784 780 855 791 787 879 -10%
Naphtha
North America 71 40 55 58 82 40 19 14 29 16 43 -63%
Europe 314 265 260 233 270 319 232 255 227 295 224 32%
Pacific 754 794 776 886 689 746 814 806 927 927 863 7%
Total OECD 1138 1099 1091 1177 1040 1105 1066 1075 1183 1238 1130 10%
3
Gasoline
North America 1143 1128 1081 1181 1038 996 889 990 946 829 1084 -24%
Europe 160 203 218 261 196 239 280 355 293 168 288 -42%
Pacific 96 73 90 56 105 120 71 70 85 70 43 65%
Total OECD 1399 1404 1389 1498 1339 1354 1239 1415 1325 1068 1415 -25%
Jet & Kerosene

North America 161 183 63 40 39 80 45 41 72 58 30 93%
Europe 374 370 402 399 468 454 462 485 454 383 456 -16%
Pacific 69 43 34 22 33 79 49 42 42 39 12 233%
Total OECD 603 595 500 461 540 612 555 569 568 480 498 -4%
Gasoil/Diesel
North America 175 132 72 50 94 106 39 36 17 18 19 -5%
Europe 967 780 880 917 1039 1224 963 852 1245 843 818 3%
Pacific 77 91 119 128 117 81 81 83 94 45 115 -61%
Total OECD 1219 1003 1072 1095 1250 1410 1083 971 1356 905 952 -5%
Heavy Fuel Oil

North America 343 323 286 246 266 326 326 315 210 174 287 -39%
Europe 476 433 447 446 462 474 567 553 799 560 435 29%
Pacific 91 95 125 143 94 144 128 110 99 116 160 -27%
Total OECD 910 851 858 834 821 943 1021 978 1109 851 882 -4%
Other Products
North America 1121 1050 1075 1061 1117 935 896 871 923 786 1011 -22%
Europe 929 854 763 786 750 737 776 806 892 831 777 7%
Pacific 243 254 298 319 316 279 324 278 370 296 388 -24%
Total OECD 2294 2157 2137 2165 2182 1951 1996 1956 2185 1913 2177 -12%
Total Products
North America 3028 2883 2661 2674 2669 2509 2226 2267 2202 1903 2505 -24%
Europe 3484 3180 3238 3319 3426 3697 3530 3585 4195 3300 3288 0%
Pacific 1908 1906 2032 2135 1895 1952 1985 1965 2119 2037 2138 -5%
Total OECD 8420 7969 7931 8128 7990 8159 7741 7817 8516 7241 7932 -9%
Total Oil
North America 11222 11097 10707 10579 10555 10253 9767 9729 9709 8858 10856 -18%
Europe 13268 12864 13011 13296 12950 12698 12662 12977 13113 11934 13089 -9%
Pacific 8724 8623 8637 8594 8303 8512 7691 8007 7948 8071 8668 -7%
Total OECD 33214 32584 32354 32469 31809 31463 30120 30713 30770 28862 32614 -12%
1 Based on Monthly Oil Questionnaire data submitted by OECD countries in tonnes and converted to barrels.
2 Excludes intra-regional trade
3 Includes additives
58 12 November 2009

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12 November 2009

NOT SO DISCONNECTED? .......................................................................................................................................................... 4

OECD STOCKS ................................................................................................................................................................................ 29

demonstrate a primary price‐driving role for this 86

4 12 N OVEMBER 2009

12 N OVEMBER 2009 5

Twelve Largest Oil Consumers* Gasoil Demand, Actual & F'Cast

1997 1999 2001 2003 2005 2007 2009

* Total Oil Dem and > 1.5 m b/d

6 12 N OVEMBER 2009

Middle East -218

Latin America Africa

12 N OVEMBER 2009 7

8 12 N OVEMBER 2009

12 N OVEMBER 2009 9

months, the persistent weakness in naphtha (5)

strong pace of consumer stockbuilds during

1H09. Cheaper natural gas, meanwhile,

10 12 N OVEMBER 2009

OECD Europe Demand by Product

kb/d Germany: Heating Oil Demand kb/d Germany: Naphtha Demand

12 N OVEMBER 2009 11

OECD Pacific: OECD Pacific: Demand by Driver,

12 12 N OVEMBER 2009

12 N OVEMBER 2009 13

It must again balance the profitability of -6% -10%

state‐owned refiners against the effects

14 12 N OVEMBER 2009

% India: Jet Fuel Sales Tax, Selected States/Territories

12 N OVEMBER 2009 15

India: Demand by Product

Saudi Arabia: Total Oil Product Saudi Arabia: Other Products

16 12 N OVEMBER 2009

12 N OVEMBER 2009 17

• OPEC crude production rose by 110 kb/d to 29.0 mb/d in October, the highest level since January

18 12 N OVEMBER 2009

OPEC Crude Oil Supply

12 N OVEMBER 2009 19

OPEC Crude Production

(excluding Iraq, Nigeria, Venezuela 5.42)

20 12 N OVEMBER 2009

12 N OVEMBER 2009 21

22 12 N OVEMBER 2009

US Ethanol Margin vs Production Jan

12 N OVEMBER 2009 23

mb/d Alaskan Crude Production US Crude Imports by Source

24 12 N OVEMBER 2009

12 N OVEMBER 2009 25

26 12 N OVEMBER 2009

12 N OVEMBER 2009 27

28 12 N OVEMBER 2009

kb/d OECD Total Oil Stocks mb OECD Middle Distillate Stocks mb

12 N OVEMBER 2009 29

30 12 N OVEMBER 2009

OECD North America mb US Weekly Industry Crude Oil

mb US Weekly Total Diesel Stocks mb US Weekly PADD 1 Heating Oil

12 N OVEMBER 2009 31

32 12 N OVEMBER 2009

OECD Pacific Crude Oil Stocks mb Japan Weekly Kerosene Stocks

12 N OVEMBER 2009 33

Regional OECD End-of-Month Industry Stocks

Days Europe mb Europe

Days Pacific mb Pacific