Letter from the US: Refiners are no longer mere price takers

OPEC watchers should not undervalue the buying power of refiners in the changing oil market equation

Those who write or talk about oil markets tend to think of refiners as lemmings. Almost every analysis ties crude price changes to shifts in global supply and demand. Forecasters expect prices to rise if more oil is consumed than produced and fall if supply exceeds demand. In their models, the analysts see refiners as price takers, that is, the ‘lemmings’, those that exhibit herd mentality and commit mass suicide. In this case, refiners hypothetically accept en masse whatever crude prices and volumes the producers offer up. The real lemmings, however, are the analysts, reporters and commentators who focus on barrel counting. Their assessments of market conditions rarely diverge. Refiners and