OPEC blames limited refining for prices

OPEC has backed off its position that high oil prices can be blamed on the falling value of the dollar, various geopolitical issues, and the actions of speculators in the oil markets.

Instead, it now holds that the lack of refining capacity in refineries worldwide is the main factor in high oil prices.

This position is based on the fact that prices on petroleum products have grown faster than the price of crude oil, and in fact some traders also believe that it is the tight market in finished petroleum products that is pulling crude oil prices up.

While Brent crude prices are up 41 percent and West Texas Intermediate is up 31 percent, US gasoline futures have risen nearly 50 percent since December and US heating oil futures are up 34 percent in that period and up over 70 percent in the past year.

This circumstance has led to a rise to about $10 per barrel in refiner margins, bringing higher profits to refiners, with capacity likely to stay lower than demand.

On Friday, IPE Brent for August delivery rose $1.16 to $57.38 per barrel, while West Texas Intermediate July contracts on the New York Mercantile Exchange was up $1.37 to $57.95 per barrel, both near record highs.

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