(146f) Modeling Oil Pricing and Financial Market Behavior by Considering Chemical Engineering Principles in Operations and Production

The goal of this research was to begin an initial exploration and analysis of the oil commodity markets and to investigate statistical and applied engineering fundamentals on the production of oil-based products and these products pricing on the financial markets. After compiling open-source pricing data a fair value model for the spot price of oil was created and the variables that might have an impact upon the oil markets identified and analyzed. Examples of such variables include: wars, weather and policy regulations. In this initial study the behavior of oil market prices during summers and the impact of catastrophic weather events, specifically hurricanes are analyzed to conclude if they truly impact the price of crude oil. Both the spot prices and futures markets were studied and this analysis provides some initial research on the pricing of the oil derivative market. Future work in this area will include an explicit incorporation and impact of state and federal policy regulations and taxes, production and profitability costs ? where here supplemental data from refiners would be necessary, and improvements and extensions of the statistical based modeling begun in this study.