Oil Refinery

DEFINITION of 'Oil Refinery'

An industrial plant that refines crude oil into petroleum products such as diesel, gasoline and heating oils. Oil refineries essentially serve as the second stage in the production process following the actual extraction by oil rigs. The first step in the refining process is distillation where crude oil is heated at extreme temperatures to separate the different hydrocarbons.

BREAKING DOWN 'Oil Refinery'

The crude oil components, once separated can be sold to different industries for a broad range of purposes. Lubricants can be sold to industrial plants immediately after distillation, but other products require more refining before reaching the final user. Major refineries have the capacity to process hundreds of thousand barrels of crude oil a day.

RELATED TERMS
  1. Crude Oil

    Crude oil is a naturally occurring, unrefined petroleum product ...
  2. Benchmark Crude Oil

    Benchmark crude oil is crude oil that serves as a pricing reference, ...
  3. Sour Crude

    The name given to barrels of crude oil that do not meet certain ...
  4. Crack

    A trading strategy used in energy futures to establish a refining ...
  5. Crack Spread

    The spread created in commodity markets by purchasing oil futures ...
  6. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
Related Articles
  1. Stock Analysis

    Mideast Unrest Squeezes Refiners

    While shares of big oil names like Exxon and Chevron rally on higher prices, supply disruptions in the Middle East and North Africa may put the squeeze on refiners.
  2. Economics

    The End of US Foreign Oil Dependency

    Learn about how U.S. production of oil is increasing on an annual basis and how oil imports are dropping, and why Congress may lift a ban on the export of oil.
  3. Economics

    Ending The Limits On U.S. Crude Oil Exports

    As US storage capacity reaches its limit, industry participants and their lobby groups in Washington are calling for an end to the crude oil exports ban.
  4. Stock Analysis

    Is Now the Right Time to Buy Oil Stocks?

    Learn about the oil industry and how crude oil effects the prices of oil stock. Understand if now is a good time to purchase oil stock.
  5. Investing Basics

    What is Crude Oil?

    Crude oil is a natural petroleum product that’s composed of organic materials, including hydrocarbon deposits.
  6. Options & Futures

    Commodities: Crude Oil

    By Noble DrakolnCrude oil is a naturally-occurring substance found in certain rock formations in the earth. To extract the maximum value from crude, it needs to be refined into petroleum products. ...
  7. Investing

    Large Cap Energy Companies Benefit From Cheap Oil

    Some pockets of the US oil value chain, such as refining, as well as some high-tax foreign operators tend to benefit when oil prices decline.
  8. Investing Basics

    Why Gasoline Costs What It Does

    The next time you have to dig deep into your wallet to fill your gas tank at least you'll know exactly what you're paying for.
  9. Investing News

    Europe's Oil Refineries Get A Second Chance (CS, TOT)

    The European refining sector is benefiting from the drop in oil prices, but it may not last the year. Can high margins beat structural overcapacity?
  10. Investing

    Where I'm Looking For Value In The Oil Sector

    <p>The rapid meltdown in oil prices appears to have caught almost everyone off guard. When I looked at the crude oil market in early October...
RELATED FAQS
  1. What economic indicators do oil and gas investors need to watch?

    Leading indicators for oil and gas investments are centered around the levels of production, consumer demand and inventory ... Read Answer >>
  2. Why are stocks and oil so correlated right now?

    Learn whether the stock market and oil prices will continue their highly correlated price relationship or decouple again ... Read Answer >>
  3. Do all oil companies received the quoted price of West Texas Intermediate for their ...

    Learn about the three benchmark oil prices, the primary factors that determine the quality of crude oil and the price it ... Read Answer >>
  4. What causes oil prices to fluctuate?

    Discover how OPEC, demand and supply, natural disasters, production costs and political instability are some of the major ... Read Answer >>
  5. Why did oil prices drop so much in 2014?

    Learn the roles that decreased global demand, new supply sources in North America and actions taken by Saudi Arabia played ... Read Answer >>
  6. When you buy oil, do you have to buy thousands of stocks at one time or can you start ...

    I am new to oil stocks and want to invest a couple thousand dollars. Do oil stocks pay dividends? Is now the time to ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center