Is it true that the price of crude oil is worked out in a 6 month advance?

If the oil price is projected so far ahead why does the national petrol/diesel price rise so often in small increments. Could the fuel authorities not work thier increases out on a more once off basis by looking at the forecasted oil price figures.

One Response to “Is it true that the price of crude oil is worked out in a 6 month advance?”

  1. Michael K Says:

    No, it's not true. The price of crude is determined by supply and demand, and changes daily. While estimates can be made of both supply (which doesn't change much) and demand (which is growing constantly), it is the daily buying and selling that sets the price of crude. Prices fluctuate on such things as the weather (cold spells require more #2 fuel oil), refinery shut-downs (as occurred with hurricane Katrina), and the finding or shutting down of production facilities (BP's shutdown of the Prudoe pipeline for repairs ) The 'fuel authority' is the market.