Part A: Review (2018/12/3-2018/12/7)

From December 3, 2018 to December 7, 2018:the closing price of the main contract of crude oil futures of INE on Friday was 411.8 yuan/barrel, 6.3 yuan lower than the closing price of the last trading day of last week. The highest price for this week is 437.8 yuan/barrel, and the lowest point is 405.3 yuan/barrel.

This week (2018/12/3-2018/12/7), the total volume of the main contract was 2,790,952 lots, an increase of 339,416 lots from last week. After the close of trading this Friday, the open interest of the main contract was 37,946 lots, an increase of 1,778 lots from the last trading day of last week.

Notes: The main contract refers to the futures contract with the maximum open interest.

Part B: Market Dynamics

1. Circular on the Last Trading Day and Delivery Issues of SC1901

In accordance with Standard Crude Oil Futures Contract of the Shanghai International Energy Exchange, Shanghai International Energy Exchange hereby notifies the adjustments of the last trading day, the delivery dates and the issues concerned for the crude oil futures contract SC1901 as follows:

1. The last trading day for SC1901 will be December 28, 2018, and the delivery dates will be 5 consecutive trading days after the last trading day.

2. In accordance with Circular on Price Limit Update for Crude Oil Futures Contracts SC1812 and SC1901 (INE Circular [2018] No.65), the price limit for SC1901 will be updated from ±8% to ±10% since December 26, 2018.

3. In accordance with the Article 142 of Delivery Rules of Shanghai International Energy Exchange, a natural person as a client shall close out all the positions of SC1901 before the market close

on December 18, 2018.

Members shall remind the natural person clients to manage their positions by timely closing out.

4. In accordance with the Article 8 of Delivery Rules of the Shanghai International Energy Exchange, the clients who cannot issue or accept the prescribed invoices of the Exchange shall not make or take the crude oil futures delivery.

Members shall remind their clients of concerning rules and fully understand the clients' qualification and capability of delivery. Clients who cannot or will not make or take delivery shall be well reminded of the liquidity risk while approaching the delivery month. Clients intending to engage in the delivery shall complete the opening of standard warrant accounts through the Standard Warrant Management System. Clients as buyers shall get prepared for the payments, while clients as sellers shall get the standard warrants ready.

5. In accordance with the Article 31 of Delivery Rules of the Shanghai International Energy Exchange, the Exchange, in its sole discretion, may appoint specific Members, OSPs, Overseas Intermediaries or Clients to submit large trader position reports or other supporting materials.

Members shall know about their clients’ positions and manage risks in a sound manner.

All parties concerned shall abide by the relevant rules and make preparations for the sound delivery of SC1901.

Shanghai International Energy Exchange

December 7, 2018

2. China’s October base oil imports stay low

China's base oil imports remained low in October, with little sign of moves by the country's blenders and distributors to start building stocks early.

Total imports of 168,730t in October were down by 6pc from 179,950t the previous month and the second-lowest level in the past 15 months. Total imports of 2.2mn t during January-October were down by 5.8pc from 2.34mn t during the same period last year.

A slowdown in Chinese base oil imports in the third quarter of the year was unsurprising for a period when demand typically slows. Imports typically then rebound in September ahead of a seasonal rise in demand before slowing again in October.

This pattern repeated itself this year. But the pick-up in September imports was more muted than usual. The subsequent drop in October imports suggested few moves by buyers to delay their purchases to this month. They have instead preferred to maintain low stocks.

Their flexibility to hold lower inventories reflected weak domestic lube demand as well as the availability of plentiful supplies from domestic producers. Prices for these supplies were also much more competitive than imported base oils. Sliding crude prices during October added to the attraction of buying supplies on a need-to basis.

While demand remained weak, domestic and overseas supplies also dropped. Several domestic and regional producers trimmed their production levels or diverted surplus volumes into storage tanks in September and October in response to plentiful supply and squeezed margins.

These producers included several refiners in South Korea. Chinese base oil imports from this market fell to 65,160t in October, down from 87,880t the previous month.

Chinese demand for South Korean supplies had been firmer than usual in the third quarter of the year, when Taiwan's Group II base oils unit had been off line for maintenance. Demand for South Korean base oils then fell in October following the restart of the Taiwanese unit in late September.

Chinese base oil imports from Taiwan recovered to 23,540t in October. The volume was up from less than 8,000t the previous month and the highest since June before Formosa Petrochemical's 600,000 t/yr unit began its shutdown.

But the increase was smaller than expected. When the refinery is operating normally, imports are typically more than 35,000 t/month. The slower than expected recovery in supply helped to support prices for Taiwan base oils in China's domestic market.

Base oil imports from Singapore fell in October to a 10-month low of 37,680t. The slowdown coincided with a rise in Singapore base oil exports to the US in September to a record high of more than 90,000t, up from typical volumes of 40,000-50,000 t/month.

Group I base oil imports from Thailand and Indonesia combined fell back to 10,500t in October, down from 16,130t the previous month. Almost all of the October volume was from Thailand, whose producers have had persistent surplus availability of heavy neutrals and bright stock. More limited bright stock imports and dwindling stocks had helped to support Chinese domestic bright stock prices over the last couple of months.

Imports of premium-grade base oils from the Mideast Gulf got a boost from the delivery of 11,900t of supplies from Qatar. The volume was the highest in three months. Imports of 1,590t from Bahrain were the highest since March. But the lack of supplies from the UAE continued with no cargo volumes from this market since July.

Part C: Transaction Summary

Since March 26th and up to December 7th closing, Shanghai crude oil futures’ cumulative trading volumes is 45. 83 million lots, and the cumulative trading volumes of the first month of listing (2018/3/26-2018/4/25) is 1.33 million lots. The cumulative amount of transaction is 22.59 trillion yuan (2018/3/26-2018/12/7), which is 39.83 times that of the cumulative amount of the first month of listing.

Average daily turnover of the main contract is 558,190 lots (2018/12/3-2018/12/7), and average daily turnover of the main contract is 490,307 lots (2018/11/26- 2018/11/30).

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