What is Crude Oil?
Crude oil is a petroleum product that is extracted from the earth’s crust. It is the result of organic matter degradation over long periods of time.
The term ‘crude’ is used to indicate that the product is unrefined. Many products, such as gasoline, diesel fuel, as well as many chemical products (many of the products sold by CORECHEM Inc.), can be refined out of crude oil.
The market is broken into two categories:
WTI (West Texas Intermediate): This is a crude oil product that was named after the area it was first found (West Texas).
Brent: ‘Brent’ oil is extracted from every other deposit around the world.
Price Stability of Crude Oil
A commodity, the price of crude oil is influenced by many things. Factors that influence the price of crude oil include: supply and demand, world events (including geopolitical tension), and the strength of the U.S. dollar.
Most recently, typical prices may fluctuate around approximately $60 -$80 per barrel. During unusual periods, however, crude oil may trade much higher or lower. Due to the inherently volatile nature of the market, crude oil prices spiked to over $120/barrel as recently as 2022; and plunged so far as to trade negative (at a freakish -40/barrel!) at the beginning of the pandemic.
The next time you are standing at the gas station, wondering about the constantly changing price of gasoline, know that it could have everything to do with… what you might be seeing on the news!
(… too bad they didn’t pay us to take away gas during that crazy period at the beginning of the pandemic!!)
How Does Crude Oil Affect Chemicals?
Many chemical products are directly derived from crude oil. A fluctuation in supply or price of crude oil is likely to have a direct affect on these chemical products.
Indirectly, fluctuations in crude prices can also affect chemicals by affecting the costs of logistics / (gasoline prices).
Initially, crude oil is refined in a distillation process. Certain chemicals may be produced at this stage. Other chemicals are derived via complex downstream processes.
With questions about crude oil markets, and how chemicals are affected, get in touch! We’ll be happy to speak with you!!
