The price of oil is strongly tied to supply, which means whenever an event happens that hampers the availability of this natural resource, costs may go up. The spill that occurred in Texas over the weekend is something investors who participate in crude oil trading should keep a close eye on.
This incident caused marine traffic to shut down on the 52-mile corridor in Texas, which blocked the access of eight refineries to their supply of crude oil, according to Forbes. The period of time this area is closed down due to the spill is valuable information to traders, as the longer refineries don’t have access to their supply, the higher the price of oil could rise.
“The closure could persist all week, so it may prove to supportive for prices, as crude oil deliveries will be hampered,” Michael Fitzpatrick, editor of The Kilduff Report, told USA Today. “Some 10 percent of the nation’s refining capacity if located at the channel.”
The biggest concern surrounding the spill is that it cut off Exxon from it’s refinery in Baytown and Marathon Petroleum from it’s refinery in Texas City, which are two of the biggest in the country. Crude oil traders would be wise to keep a close eye on this news story, because any extended closing of these refineries could have a major impact on supply. As a result, the price of crude oil could be volatile in the coming weeks, which is valuable information to any trader.
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