ABSTRACT
Crude oil represents the primary input and cost in refining operations, and along with product prices, is the main determinant in refining margins. This chapter discusses the primary factors impacting crude oil and refined product prices. The price of crude oil is determined by many different factors and is the outcome of thousands of decisions and transactions that occur every day throughout the world involving crude producers, traders, refiners, speculators, OPEC, and other players. In broad terms, the price of crude oil is a reflection of the value generated by the products derived from processing it into refined products. Crude oil and petroleum products are global commodities, and as such, their prices are determined primarily by supply and demand factors on a worldwide basis. Supply and demand concepts are a fundamental component of market economies and are an important tool to understand prices and quantify the effects of market conditions.
