Indiana Motor Truck Association

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Indiana Motor Truck Association

• Mark Hazelwood
• Pilot Travel Centers LLC
• November 7, 2009

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Todays Oil Market

• As we know, there are known knowns. There are
  things we know we know. We also know there are
  known unknowns. That is to say we know there are
  some things we do not know. But there are also
  unknown unknowns, the ones we don't know we don't
  know.
• Donald Rumsfeld

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NYMEX WTI 2005 - 2009
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NYMEX Heating Oil 2005-2009
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NYMEX HO vs. API Distillate Stocks
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Days Supply Distillate API
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WTI vs. U.S. Dollar 2008 -2009
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WTI vs. U.S. Dollar One Day Trade
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Inventory Levels

• Crude 340 million barrels, 28 vs. 2008
• Slightly higher than 5 year range
• Distillate 168 million barrels, 40 vs. 2008
• 28 million higher than 5 year range
• Does not include floating storage
• Crude oil 125 million barrels
• Diesel 40 million barrels
• Highest Diesel Inventory Level Since 1983
• 27 Year High!!!

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Refined Products Supply

• Increased worldwide refining capacity growth
  booming
• China increasing at twice domestic demand growth,
  up 2 million b/d in last 3 years
• India Primary international exporter
• Middle East Strong growth
• U.S. Growth continues (due to asset commitments
  4 years ago)
• Moved from emergency studies for refineries on
  abandoned military bases to 18 idled capacity

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IEA World Oil Demand

• 2009 average 84.6mmbd
• 1Q08 87.5mmbd 2Q09 84.1mmbd (-3.4mmbd)
• OECD 2006 demand 49.5mmbd 2009 demand
  45.4mmbd (-4.1mmbd)
• China 2006 7.2mmbd 2009 8.3mmbd (1.1mmbd)
• Worldwide recession, Conservation, Renewable
  Fuels

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Demand IEA

• Total U.S. oil demand 18.7 mmbd
• Consistently revised lower / 12 straight months
  of -4 to -8 growth
• August -3.14 (608mbd)
• Diesel Still falling -7.54 vs. 2008 (-276mbd)
• -20 vs. 2007?
• Gasoline Slight recovery, 3 consecutive monthly
  increases (vs. very weak 2008)

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Geopolitical Issues

• Iran Slow dancing with IAEA over nuclear
  development
• Israel retaliation?
• OPEC Increasingly helpless2007-8 run-up/fall
  and 2009 increases
• Excess capacity From 1mmbd to 6-7mmbd in 3 years
  (production capacity demand slump)
• 62 compliance to 4.2mmbd export cut 1 year
  agoslowly putting more oil on market as price
  increases (would cheat more if they could)
• Target of 75 to 80/bbl

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Technical Analysis

• Beginning Long Term 5th Wave
• Will eventually challenge 2008 in several years
• Short term (current to 1Q10)choppy, volatile
  with bearish grind. NYMEX Crude 50 - 55, NYMEX
  Heating Oil 1.60.
• If its wrong, there is a reason. 224?

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Investment Funds

• Oil Morphed from fuel to investment class
  commodity
• Commodities provides potential strong investment
  gains
• Smaller, more manageable market than ForEx or
  Equities but tremendous liquidity
• Hedge against inflation
• Follow the U.S. Dollarfor now
• Inverse correlation to the USD is strong, until
  it isnt

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• We demand rigidly defined areas of doubt and
  uncertainty.
• Douglas Adams

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Pilot / Flying J Merger

• Shooting for 12-15-09
• F/J will remain branded F/J
• Restaurants will be changed to
• Dennys
• Golden Coral
• IHOP
• Billing Companies
• Comdata
• TCH

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Questions