The Price Of West Texas Intermediate - 1494 Words

When faced with a downward sloping demand curve, a firm is said to have some degree of market power and will therefore produce to the point where marginal cost equals marginal revenue in order to maximize profit. In other words, if a firm is producing too much of a good and selling it at too low of a price point, the firm will scale back production in order to sell at a higher price. Beginning June 2014, the price of West Texas Intermediate (WTI) crude has dropped from $105 per barrel to where it is now currently priced at $42 per barrel on November 2015, constituting a price decrease of more than 60% over a period of eighteen months. This price drop is due to an increase in oil production primarily coming from Saudi Arabia and Iraq along with the American shale plays that is causing an outward shift in the global supply of crude oil. With the short term demand for oil being inelastic, a moderate increase in supply will cause a large decrease in the market price. Basic intuition of a n oil producing firm with enough market power to face a downward sloping demand schedule, OPEC, would have it so production is scaled back in order to drive prices back up to former levels, however, this is not the case of what happened. OPEC, along with its lead producing country, Saudi Arabia, has been producing at their maximum production capacity in order to saturate the market as much as possible and drive oil prices down even lower. The Organization of Petroleum Exporting Countries,Show MoreRelatedEssay on Oil in Texas1561 Words   |  7 Pagesbusinesses in Texas, and how did Texas oil discoveries affect the national oil market? As the Texas oil industry grew, so did related industries. Some companies began producing oil by-products such as petrochemicals. Others produced pipelines, barrels, and oil-field equipment. As these companies began moving into oil towns such as Houston, Beaumont, and Port Arthur, they further expanded the local economies. Some moved into small towns, quickly turning them into cities. In North Texas the town ofRead MoreEssay On Oil1069 Words   |  5 Pageschoice, as the commodity can and will come in a number of different forms. Before you jump feet first into the world of oil commodities, it will pay to commit the following oil types to memory. West Texas Intermediate Containing low amounts of sulphur and being of a low density, West Texas Intermediate (WTI) is an oil type you are going to hear a lot about should you choose to trade oil online. With a sulphur content of just 0.24%, WTI is classified as a light crude oil, with the refining of suchRead MoreRelationship Between Currency And Commodity Correlations937 Words   |  4 Pageshappens, with Australia – the third biggest gold producer in the world – being put in the frame. Gold subsequently has a positive correlation with the AUD/USD paring. In fact, history shows that AUD/USD has had a staggering 80% correlation to the price of gold. So, when gold booms so does AUD/USD and when gold dips the AUD/USD drops. AUD/USD and Silver Many seem to believe that AUD/USD and gold is the most important correlation to follow in 2017. While it’s prominence can’t be denied, AUD/USD andRead MoreCh3-Arbitrage and Financial decision making1516 Words   |  7 Pagescan use one -sided prices values. C) Competitive market prices allow us to calculate the value of a decision the tastes or opinions of the decision maker. D) Because competitive markets exist for most commodities and financial to determine cash values and evaluate decisions in most situations. Answer: B Diff: 2 Skill: Conceptual Use the information for the question(s) below. 分ä º «Ã¥Ë† °Ã¯ ¼Å¡ åŠ  Ã¥â€¦ ¥Ã¤ ¼Å¡Ã¥â€˜ËœÃ¯ ¼ Ã©â‚¬ Ã¥â€¦ Ã¨ ´ ¢Ã¥ ¯Å'å€ ¼Ã¤ ¸â€¹Ã¨ ½ ½Ã§â€° ¹Ã¦ Æ' 1 /25 Alaska North Slope Crude Oil (ANS) West Texas Intermediate Crude Oil (WTI) ä ¸â€¹Ã¨ ½ ½ Read MoreWage Led Growth Good For Credit Unions And The Macro Economy775 Words   |  4 PagesWage-led growth good for credit unions and the macro economy 2016 opened with stock markets in turmoil, news on the slowing Chinese economy, and oil prices falling below $30 a barrel. Credit unions have concerns on how these affects their operations. Concerned investors overreacted to the news of a slower Chinese economy, which partly explains the stock market turmoil in the U.S. and around the world. China’s economy is not immune from the business cycle. Its economy’s growth rate eventually cameRead MoreCommunity Vitality At University Medical Clinic1377 Words   |  6 Pagesoutside a gas station, filling-up their cars within the community. Additional citizens were mostly seen at University Medical Outpatient Clinic. Consequently, there were neither tourists nor apparent visitors to this town except for us solitary Texas Tech students. Perhaps, the only noticeable, prospective visitors may have been those individuals seen near an Interstate 10 gas station, situated on the edge of this township. Most citizens that were look to be between the ages of 35-65 years oldRead MoreThe Implications Of Oil Trade909 Words   |  4 Pagesdemand. Considering only Canada for all the expected oil production from the Western provinces doesn’t seem enough. To achieve the forecasted production levels, producers of Western Canadian oil must find a market that values their oil at reasonable price. Without access to seaports, Alberta and Saskatchewan need to develop their transportation capacity to export this expected production. The challenge related to the increasing availability of Western Canadian oil and its distribution to domestic andRead MoreEffects of 9/11 on American Economy Essay625 Words   |  3 Pagesbillion (Sahadi). The national average weekly price was $1.53 per gallon and $27.66 per barrel on September 10, 2001; the day before 9/11 attacks. On the day of the terrorist attacks, the price of West Texas Intermediate crude rose to $29.59 a barrel; an increase of 7%. Oil and gas prices began to increase rapidly in 2004 as a result of American-led invasion of Iraq. Gasoline prices rose to $4 per gallon in summer 2008 (Miley). However, recently, average price of gasoline throughout 2013 is estimatedRead MoreBp and Stakeholder Mismanagement1598 Words   |  7 PagesThesis Poor stakeholder management led to preventable mishaps such as the disasters in Alaska and Texas. Specifically, BP s defensive approach towards stakeholder management led to lavish compensation for upper level management while creating hazardous working conditions for employees and a burden on all of society in the form of rising oil prices and environmental damage. Background British Petroleum was founded in 1908 and since then has rapidly grown to become the eighth largest companyRead MoreThe Potential Impact of Electric Vehicles on the Oil Industry825 Words   |  3 Pagesthe Oil Industry Question A Crude price differentials refer to the differences which are seen in the prices of the different types of crude oil (Oosterman, 2013, para. 2). Sweet crude, such as West Texas Intermediate (WTI), tends to be favored over sour crude as it has a higher yield, requires less refining to meet sulfur content standards, and has fewer environmental issues (Oosterman, 2013, para. 4). Therefore, the sweet crude tends to have a higher price compared to other types of crude. If