# Presentation: 286988

## Drowning in Sour Oil

- Energy Analyst
- Deutsche Bank
- 212 250 2998

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- Adapting to a New Crude Quality Dynamic
- 2005 EIA Midterm Energy Outlook
- April 12, 2005

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## Issue at Hand: Crude Quality Spreads Going Nuts

- Source: Bloomberg, Deutsche Bank

**WTI - WTS**

**WTI - Maya**

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## Refining capacity deficit continues to rise  

**Refining capacity deficit continues to rise****  **

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## Heavy/light product spread vs conversion capacity... Additions don’t pace demand

- Source:  DOE/EIA, Bloomberg, Deutsche Bank

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## Natural gas vs distillate vs resid... Clean fuels premium, gas against distillate not resid

- Source:  Bloomberg, Deutsche Bank

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## Deutsche Bank Macro Price Deck

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## US Refining... Strong demand squeezes patchwork supply

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## Sulfur specification timeline...It’s global

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## US Coker Additions vs Heavy/Light Spread3-year investment cycle - and spread - extended, little plans for growth

- Source: DOE, Deutsche Bank

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## Underinvested US Refining Needs Sweeter Crude SlateAnd increasingly heavy barrel further widens heavy discount

- Source:  Bloomberg, DOE, Deutsche Bank

**North American Crude Quality Declines**

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## Drowning in Sour CrudeNon-OPEC, GOM crude quality deteriorating just as ridding world fuels of sulfur

**Gulf of Mexico crude quality**

**Non-OPEC crude quality**

- Source:  Wood Mackenzie, Deutsche Bank

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## Heavy Crude Discount Moves with OPEC Production

- Source: IEA, Bloomberg, Deutsche Bank

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## Diesel’s Truckin’... Midwest diesel demand vs trucking activity

- Source:  ATA, DOE, Deutsche Bank

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## US Distillate Imports/Exports... Rising exports to a tight Europe constraining US

- Source:  DOE/EIA, Deutsche Bank estimates

**Gross imports drop in Q4, Q1**

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## Demand Cover by US Gasoline and Distillate Inventories... Looking a lot like 2000

- Source:  DOE, Deutsche Bank estimates

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## Flat US Gasoline Imports Supports Prices... What’s going to fill the gap? Potentially yields but only in short term

- Source: DOE, Bloomberg, Deutsche Bank

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## Refiners vs Heavy/Light spread...Best fit - it matters!

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## Heavy crude sensitivitiesFrontier, Holly, Premcor, Valero, and Sunoco registers

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## Valero’s Switch to Short-Haul Supply Saves on Freight

**Source: US DOE, Worldscale, Deutsche Bank**

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## Valero Cheapens Crude DietDiscounts increase with heavier slate

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## Additional Information Available upon Request

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- Jay Saunders

**Deutsche Bank Securities Inc.**

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## Deutsche Bank Securities Inc.

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**Deutsche Bank Securities Inc.**

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