Slide 7 of 15

Notes:

• The East Coast (PADD 1) is the primary heating oil region, and it depends heavily on production from the Gulf Coast (PADD 3) as well. The biggest decline in U.S. stocks has taken place in the heating oil markets of PADD 1 (East Coast), which consumed 86 percent of the nation’s heating oil in 1998. It also is the region with the largest volume of heating oil stocks.
  • PADD 1 was down over 8.4 million barrels on January 21 from the 5-year average stock level for end of January
  • PADD 3, which supplies PADD 1, was down 4.6 million barrels from its 5-year January ending levels.

• During the week ending January 21, weather in New England was nearly 20% colder than normal for this time of year.

• This cold weather on top of low stocks was pushing prices up, with the forecast for temperatures to remain below normal in the Northeast until early February. It was reported that utilities and commercial consumers were buying distillate for peaking power and for filling in for interruptible natural gas contracts, adding to the market pressure. Furthermore, apparently some barge deliveries were being delayed because of storms. Finally, refinery outages at the end of the week sent more buyers into the market, and prices spiked.

• Low sulfur distillate (diesel) stocks in the Northeast are closer to average levels than heating oil (only about 2 million barrels below average as of January 21), but this could change, too, if there is much delay in new heating oil supply.