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Alon explosion = $100 bbl oil? Are we that skittish?
The investigations into the explosion at the Big Spring refinery are just getting started, but the effects are already visible. Yesterday the price of crude oil broke the $100/bbl level, but it has retreated a bit today. Since commodity trading is based as much on emotion as anything else, we shouldn't be too surprised. But are we really all that skittish?
I don't want to belittle the injuries that individuals suffered and the losses to Alon, but the output of the Big Spring refinery isn't that much in the greater scheme of things. It's about 70,000 bpd, which is pretty small (<1%) given total refining capacity in the U.S. of somewhere around 17.5 million bpd. Moreover, oil consumption has been down slightly. Of course that refinery outage isn't the only thing influencing prices. OPEC is making scary noises about production cuts and our relationship with Venezuela has been better, but having oil in the $85-$90 ballpark right now would make sense. Let's not underestimate how quickly and how violently people can react. Watch out for those flying knees.
Alon explosion = $100 bbl oil? Are we that skittish?
February 20, 2008
The investigations into the explosion at the Big Spring refinery are just getting started, but the effects are already visible. Yesterday the price of crude oil broke the $100/bbl level, but it has retreated a bit today. Since commodity trading is based as much on emotion as anything else, we shouldn't be too surprised. But are we really all that skittish?I don't want to belittle the injuries that individuals suffered and the losses to Alon, but the output of the Big Spring refinery isn't that much in the greater scheme of things. It's about 70,000 bpd, which is pretty small (<1%) given total refining capacity in the U.S. of somewhere around 17.5 million bpd. Moreover, oil consumption has been down slightly. Of course that refinery outage isn't the only thing influencing prices. OPEC is making scary noises about production cuts and our relationship with Venezuela has been better, but having oil in the $85-$90 ballpark right now would make sense. Let's not underestimate how quickly and how violently people can react. Watch out for those flying knees.
Posted by Peter Welander on February 20, 2008 | Comments (0)
Industries: Process Control
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