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. Crack

    A trading strategy used in energy futures to establish a refining ...
  3. Downstream

    The oil and gas operations that take place after the production ...
  4. West Texas Intermediate - WTI

    Light, sweet crude oil commonly referred to as "oil" in the Western ...
  5. Benchmark Crude Oil

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

    The name given to barrels of crude oil that do not meet certain ...
Related Articles
  1. Markets

    Oil Stocks That Benefit From OPEC Overproduction (TSO, HFC)

    Despite falling oil prices, many oil refinery stocks have had a stellar performance. Here's a list of top performers with strong future potential.
  2. Markets

    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. Markets

    The Reasons for the Mexican-U.S. Oil Swap

    The U.S. government is getting close to a historic deal to allow U.S. producers to swap the light, sweet crude oil that is in too much supply with Mexico, in return for heavy crude.
  4. Markets

    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.
  5. Markets

    Why Low Oil Prices Don't Always Mean Low Gas Prices

    Find out why gasoline prices do not always decline with oil prices. Learn about the impact of the refining process, taxes and marketing, and distribution.
  6. Trading

    How Does Crude Oil Affect Gas Prices?

    Find out how this commodity's fluctuating price affects more than just how much you pay at the pump.
  7. Markets

    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.
  8. Markets

    What is Crude Oil?

    Crude oil is a natural petroleum product that’s composed of organic materials, including hydrocarbon deposits.
  9. Markets

    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.
  10. Markets

    American Oil Production's Amazing, Crude Future

    Is America producing more crude oil than it is consuming? How is technology changing the American oil industry? What will domestic oil industry look like in the near future?
RELATED FAQS
  1. Why do oil stock prices drop?

    Doesn't lower oil prices mean more profit for companies that use oil products?  ... Read Answer >>
  2. What economic indicators are especially important to oil traders?

    Economic indicators are used by traders and investors in an attempt to understand the underlying fundamentals of the market. ... Read Answer >>
  3. What is a heavy oil differential and how does it affect oil producers?

    Learn what the phrase "heavy oil differential" refers to and the significance of heavy oil differentials for oil production ... Read Answer >>
  4. 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 >>
  5. If oil producers run out of room to store oil, will the price of gasoline plummet?

    Learn about what happens to gasoline price when room to store oil runs out and whether this creates a good situation for ... Read Answer >>
  6. 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 >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center