Rohde Petrochemical Volatility Outlook

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Information about Rohde Petrochemical Volatility Outlook
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Published on January 23, 2008

Author: Demetrio

Source: authorstream.com

Perspectives on Petrochemical Volatility for Customer Name:  Perspectives on Petrochemical Volatility for Customer Name 2005 - A Volatile Year for Energy Prices:  2005 - A Volatile Year for Energy Prices WTI crude oil price ranged from a low of $47 in January to over $66 per barrel Crude peaked in September, when back-to-back hurricanes in the US gulf coast shut in as much as 25% of US domestic production Little spare production capacity exists as global demand grew 1.2 MBD in 2005 Average global refining capacity utilization continued to increase in 2005 Jet fuel and heating oil margins over crude oil were above their 5 year monthly range the entire year Motor gasoline prices spiked after Katrina & Rita to all-time highs; margins over crude oil well above their 5 year range US remains net importer of motor gasoline (500 KBD 2005) Natural gas price ranged from $6 to near $14 per MBTU Over 560 BCF of production lost due to hurricanes in 2005 Variable operating cost for most chemicals now two to three times historical, even at current natural gas price Despite a significant drop in January ’06, prices remain above 5 year range Chemical feedstock volatility increased versus historic: Function of energy price volatility, plus… Due to uncertainty, lower inventories held to cover unplanned outages and demand surges More competition for capacity and refining molecules that have historically been spare Data Source is EIA, Platt’s, and OPIS USGC CG C3=, ¢/lb NA Spot Natural Gas (Henry Hub), $/MBTU New 2006 Fuel Standards Reduce Refining Flexibility:  New 2006 Fuel Standards Reduce Refining Flexibility Further volatility likely as each refiner re-optimizes its capacity Data Source is EIA, Platt’s, and OPIS Conclusions:  Conclusions 2005 a volatile year for Energy prices due to multiple factors Global crude oil demand will remain close to capacity in 2006; geopolitical issues in key crude oil producing countries of Iraq, Iran, Venezuela, and Nigeria increase uncertainty “New” U.S. motor fuels issues for 2006 add constraints Limit refining flexibility as refiners re-optimize capacity Reduce import fuel capability Requires rebalancing of key octane streams Long term pricing forecasts are impossible; understanding key industry drivers provides context to managing volatility impacts ExxonMobil remains committed to utilizing integrated, multi-site petrochemical capabilities to minimize customer impacts from upstream changes Frequent Communication Critical to Planning Our Business Together BACKUP:  BACKUP WTI Crude Oil Detailed Price History:  WTI Crude Oil Detailed Price History Data Source is EIA, Platt’s, and OPIS Slide7:  World Oil Demand Data Source is EIA, Platt’s, and OPIS USGC CG Propylene Monthly Price Variability:  USGC CG Propylene Monthly Price Variability Data Source is CMAI

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