US crude is lighter than, say, Nigerian oil, so it is hard to make diesel in quantity.
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Add to that the issues with crude oil itself, which has gone above $90 only to fall into the $70 range, but recent events have sent it to $85. These events include:
- Israeli conflict is a spark in the Middle East's powder keg. Will Israel bomb Iran?
- The US Government may take a tougher line with Iran and the oil embargo
- Crude inventories worldwide are low and falling (Demand exceeds supply—see graph below).
- Saudi leaders say they will release more oil next year if the US provides security guarantees.
- Slowing world economies will need less oil.
In short, there are a lot of factors at work, and oil traders, like the rest of us, are uncertain.