Oil prices -- WTF??

[Zkribbler]

Two major hurricanes have ripped through the US gulf coast, doing severe damage to our refineries, retarding our abililty to turn crude oil into gasoline.

In the last few days, the price of crude oil has gone . . . up?? WhY?? Because there's now a decreased demand for it??

And President Bush has again opened up America's strategic stockpile of...er not gasoline, but crude oil??

So now we have lots of crude oil fewer refineries to covert it into gasoline and increasing oil prices.

Explain to me again how the "market" acts in a rational fashion?

[rah]

But on the other side, price of gasoline has dropped recently. Go figure.

[DanS]

Explain to me again how the "market" acts in a rational fashion?

The "price of oil" that is quoted in the news is for West Texas Intermediate grade oil, which is better than average quality oil and can run in all refineries. At times of constrained refinery capacity, West Texas Intermediate and better grades carry a higher premium because they are more versatile.

Saudi, Venezuelan, and Californian lower quality heavy crude can be refined in the majority of our refineries, but not nearly all of them. Because of this, producers have to give discounts from the WTI price and the refiners may not be able to refine the crude oil even if the discount from the WTI price were quite large.

[lord of the mark]

Re: Oil prices -- WTF??

[QUOTE] Originally posted by Zkribbler

Two major hurricanes have ripped through the US gulf coast, doing severe damage to our refineries, retarding our abililty to turn crude oil into gasoline.

In the last few days, the price of crude oil has gone . . . up?? WhY?? Because there's now a decreased demand for it??

In addition to refineries, theres offshore oil production in the area. The crude markets were responding to the fear of a loss of crude production. IIUC, the price of crude has come down, as its become clear that crude production was largely unaffected.

Also, the gulf of Mexico is not the only driver of world crude markets. There has been political instability in Nigeria, and growing tensions between the West and Iran.

And President Bush has again opened up America's strategic stockpile of...er not gasoline, but crude oil??

Well thats not the market, thats Bush.

[Whoha]

Re: Oil prices -- WTF??

Originally posted by Zkribbler
Two major hurricanes have ripped through the US gulf coast, doing severe damage to our refineries, retarding our abililty to turn crude oil into gasoline.

In the last few days, the price of crude oil has gone . . . up?? WhY?? Because there's now a decreased demand for it??

And President Bush has again opened up America's strategic stockpile of...er not gasoline, but crude oil??

So now we have lots of crude oil fewer refineries to covert it into gasoline and increasing oil prices.

Explain to me again how the "market" acts in a rational fashion?

people are hoarding light sweet crude.