Why Oil Stock fall despite we in record high oil price?
I was surprise to see my oil stock still fall after so news of oil price in record high. Are the company keep all the profit them self and not share to the stock holder?
I was surprise to see my oil stock still fall after so news of oil price in record high. Are the company keep all the profit them self and not share to the stock holder?
December 9th, 2009 at 12:39 pm
That’s not the reason. Much of an oil company’s profit comes from value-added process of oil refining (turning crude oil into gasoline, heating oil, kerosene, etc.), not from sales of crude oil itself.
Most American oil companies have to *buy* crude oil from other countries, so higher crude oil prices can actually harm their profits. High crude oil prices only become good for oil companies if prices of gasoline and heating oil go up proportionally, but that’s driven by other market forces (supply and demand), not just the crude oil price.
December 9th, 2009 at 12:39 pm
Crude prices are just that – crude prices. Oil companies deal with transportation, refining and delivery. Much different.