Oil industry analysis is the process of finding out the production and consumption rates, along with the trends of globalization by the entire industry. Oil companies opt for the analysis to figure out the production so that they can evaluate the demand and supply crunch. Hence it presents a picture of trends in history of the whole industry, compared to the present sequence of events.
The companies that produce crude oil comprise a major part of the industry. The crude oil extracted is then refined to produce petroleum products. The last step is marketing for various retail customers as well as other industries. Let us see the two steps of the oil industry analysis.
Step 1: Production and measurement
Oil production is measured in unit of Barrels (bbl), where 1 bbl = 42 US gallons. The industry has a specific system to measure the production in which 'm' stands for 1000, whereas 'mm' indicates one million. So one million barrels are expressed as 'mmbbl'. This is the standard measurement criterion for most companies, while some companies follow units of barrels of oil equivalent (BOE).
Step 2: Profit analysis
Profit analysis is the core step that determines the market position of the company. This is agreed upon:
A� Total profit
A� Profit rate
Total profit is calculated to decide the trends of expenditure and revenues. Profit rate on the other hand showcases the strength of management in utilizing company resources. Total profit is also a determining factor for future investment projects, while profit rate outlines the marketing strategy of the industry.
'Crude oil acquisition' is the measurement of the actual cost of crude oil to the refiners and hence reveals the light oil or heavy oil quality of crude oil. Price differentials give the average monthly prices, net income and movement of monthly prices. There are a lot of companies that analyze on weekly basis, while those companies with short term projects analyze it monthly.
Apart from weekly and monthly analyses, companies in the industry conduct an annual study as well to isolate their net production and revenue generated. Oil prices were on a surge during the 21st century's first decade. After 2009, the prices went low due to crunch situations of those producing nations in South East Asia.
It is to be noted that crude oil extraction and refinement process may occupy a major part of production but its analysis secures an obscure space.