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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: el_gaviero who wrote (74357)	9/23/2000 12:03:54 PM
From: Think4Yourself	Read Replies (2) \| Respond to of 95453

Refiners are not storing crude because they are expecting crude prices to fall. They have been for the past year, and they have been wrong for the past year. If you buy crude at $35, store it, and crude goes to $30 then you just lost $5 for every barrel you stored. Conversely any refiners who increased their storage last winter made a killing as prices rose. The low crude levels have not impacted refinery rates because there is ample crude for refining. IF crude stores ever becomes a real problem you will notice refinery utilizations drop off. It does not work both ways in that lower refinery utilizations do not neccessarily indicate insufficient crude. It may be due to refinery maintenance season, which we are entering, or because the profit margin between crude and products does not justify refining all out. Product levels are low for one simple reason: incrased demand. Refineries can process 16.1 million barrels per day max. If demand approaches or exceeds this threshhold then it doesn't matter if there are a jillion barrels of crude in storage. product inventories will go down unless products are imported. This is why the Clinton/Gore decision is irrelevant. It doesn't address the real problem in ANY way.