7-28-08 by dugan
Here’s a crystal ball report: The top four oil companies–Exxon,
Shell, BP and Chevron–will all report record quarterly profits this
week, a result of oil prices driven to the stratosphere in speculative
markets. But our friend "Insider" says the recent drop in crude oil
prices, to about $125 a barrel, is nothing compared to what’s
coming–and his crystal ball says the stock price of refining-only
companies will foretell the fall. Consumers, however, shouldn’t hold
their breath about getting a big break at the pump.
"Shortly, the bubble created by speculative markets will burst and the price of oil could fall by up to $40 per barrel in a matter of several days.
"The signal of the bust will be when traders and hedge funds start selling oil trading paper and buying stock in refining-only companies such as Tesoro and
Valero. Refiners’ stock is currently in the tank because the big profit
right now is in oil, which they don’t have, not in refining profits.
When their stock starts to rise, oil markets will suffer the loss.
the refiners’ first aim will be to raise profits on their end of the
oil business. So consumers are in for some disappointment.
refiners, both the independents and the refining arms of big oil
companies, will take a bigger cut. Retailers, who didn’t share in the
big oil company profits, will also raise their cut before the price is
posted on the pump. So the headlines will trumpet the crash of oil, but consumers will be grossly disappointed as much of the fall in oil prices is unlikely to show up at the pump. The savings not passed on to the pump will inflate the
refining and marketing profit margins of the companies."