SUBSCRIBER NOTE: Platts to stop reflecting 7.8 RVP in pipeline conventional gasoline assessments

Following feedback gathered during a review of its US gasoline assessments initiated on October 20, 2015, Platts confirms it will no longer reflect 7.8 RVP as the lowest RVP in its US Gulf Coast conventional unleaded 87 gasoline M1 pipeline assessments, and several related assessments, from the start of the summer assessments on April 6, 2016. The lowest RVP reflected in these assessments would become 9.0 RVP.

This note details the impact of that change on the benchmark pipeline assessment, certain related pipeline assessments and supplemental assessments. Platts will continue to reflect 7.8 RVP in its waterborne gasoline assessments until further notice, given that the lower RVP gasoline still ships in waterborne markets.

Platts assesses the lowest available fungible grade of USGC conventional unleaded gasoline, meaning that Platts has typically reflected M4 (13.5 RVP) gasoline in the winter, transitioning through M3 (11.5 RVP) and M2 (9.0 RVP) in the spring and then assessing M1 (7.8 RVP) through the summer. During the summer period when the main assessment reflects M1, Platts has also published a supplemental assessment for M2.

Under its revised methodology, Platts' main pipeline assessments would reflect the lowest available fungible grade of USGC conventional unleaded gasoline down to a minimum of 9.0 RVP. Platts conventional gasoline pipeline assessments would not reflect 7.8 RVP, even if it is made available to ship by the Colonial Pipeline. CBOB and premium CBOB assessments will reflect both 7.8 and 9.0 RVPs in the summer, and RBOB and premium RBOB assessments will also continue to reflect 7.8 RVP in the summer.

RATIONALE: Liquidity in pipeline trading for many 7.8 RVP grades of gasoline, in particular the benchmark "M1" Colonial Pipeline market, has fallen substantially in recent years, and the declining supply of and demand for this fuel was noted in widespread industry feedback gathered by Platts. The steep fall in liquidity was highlighted when in February 2016 Colonial Pipeline gave notice that it would no longer ship M1 due to limited demand. Feedback from Colonial Pipeline shippers also revealed that the industry observed substantially diminished market liquidity for M1 in 2015 and expected no major pickup in volumes for 2016.

RELATED ASSESSMENTS: Following on from this change in its benchmark US Gulf Coast conventional unleaded 87 gasoline M1 pipeline assessments, Platts will also no longer reflect a 7.8 RVP in its 89-octane conventional gasoline assessment, M1 extended pipeline assessments and the extended pipeline assessments for 93-octane premium conventional with 7.8 RVP (V1). Platts will alter the seasonality of these USGC gasoline assessments so that they reflect 9.0 RVP product during the summer, and not 7.8 RVP.

SUPPLEMENTAL ASSESSMENTS: The associated supplemental assessments for these grades, previously used to reflect 9.0 RVP during the summer, will no longer be required and Platts will therefore discontinue the following supplemental assessments and all associated monthly averages, with effect from March 31, 2016:

--87-octane conventional gasoline pipeline prompt cycle PGAAB00 --87-octane conventional gasoline pipeline 1st cycle AAEWV00 --87-octane conventional gasoline pipeline 2nd cycle AAEWW00 --87-octane conventional gasoline pipeline 3rd cycle AAEWY00 --87-octane conventional gasoline pipeline 4th cycle AAEXE00 --87-octane conventional gasoline pipeline 5th cycle AAEXA00 --87-octane conventional gasoline pipeline 6th cycle AAEXG00 --89-octane conventional gasoline pipeline PGAAF00 --89-octane conventional gasoline waterborne PGAAG00 --93-octane premium conventional gasoline pipeline 1st cycle AAEXB00 --93-octane premium conventional gasoline pipeline 2nd cycle AAEXC00 --93-octane premium conventional gasoline pipeline 3rd cycle AAEXD00 --93-octane premium conventional gasoline pipeline 4th cycle AAEWX00 --93-octane premium conventional gasoline pipeline 5th cycle AAEXF00 --93-octane premium conventional gasoline pipeline 6th cycle AAEWZ00

This decision means that during summer 2016, the lowest fungible grade of USGC 87-octane conventional gasoline will reflect 9.0 RVP (M2) and appear under the price code PGACT00.

Likewise, the main USGC 93-octane premium conventional gasoline assessment will reflect 9.0 RVP (V2) and be databased under the price code PGAJB00, and the main 87-octane CBOB assessment will reflect 9.0 RVP (A2) and be databased under AARQU00.

Platts will continue to assess prompt cycle pipeline and waterborne V1 gasoline, but these assessments will appear in the supplemental section under the codes PGAJH00 and PGAJF00, respectively. Pipeline and waterborne 87-octane CBOB with 7.8 RVP (A1) will continue to be assessed, but will now be found in the supplemental section and be databased under the codes AASOB00 and AAWES00, respectively.

WATERBORNE M1: Platts will continue to assess 87-octane conventional (M1) gasoline on a waterborne basis, where more liquidity in the summer has been evident in 2014 and 2015 than on the pipeline. This M1 waterborne assessment will be published under the supplemental database code PGAAC00 with effect from summer 2016. The main waterborne 87-octane conventional assessment PGACU00 will reflect 9.0 RVP (M2), matching the change to the pipeline assessments.