MANUAL Published: 29 April 2013
MNL5820131213523

Introduction to Trading, Pricing, and Valuation of Crude Oils and Petroleum Products

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This chapter presents a primer on the concepts, systems, and mechanisms of the trading, costing, pricing, and valuation of crude oils and petroleum products. We introduce features of the physical oil and financial paper markets that adopt marker crude oils as pricing benchmarks. To gain a quick appreciation for how the oil markets have evolved, we then present a historical perspective on international crude oil supply, trading, and pricing. Next, we consider the fundamental parameters of the oil markets and the various factors that affect crude oil pricing, including the different sources of price information. We discuss the various mechanisms in which crude oils are priced and how price differentials among different crudes are set to allow the consideration of various important factors. We subsequently extend the analysis to the pricing of petroleum products. Finally, the understanding gained is used to appreciate the roles of costs and profit margins for economic evaluations in the refining industry.

Author Information

Khor, Cheng, Seong
Chemical Engineering Dept., Universiti Teknologi PETRONAS, MY
Ricardez-Sandoval, Luis, A.
Department of Chemical Engineering, University of Waterloo, Waterloo, Ontario, CA
Elkamel, Ali
Department of Chemical Engineering, University of Waterloo, Waterloo, Ontario, CA
Shah, Nilay
Chemical Engineering Dept., Universiti Teknologi PETRONAS, MY
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Details
Developed by Committee: D02
Pages: 577–596
DOI: 10.1520/MNL5820131213523
ISBN-EB: 978-0-8031-8681-1
ISBN-13: 978-0-8031-7022-3