Receipts of domestic and foreign crude oil at a refinery. Includes all crude oil in transit except crude oil in transit by pipeline. Foreign crude oil is reported as a receipt only after entry through customs. Crude oil of foreign origin held in bonded storage is excluded.
The primary feedstock used to make gasoline, diesel, jet, residual fuel and other finished petroleum products. A mixture of hydrocarbons that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Depending upon the characteristics of the crude stream, it may also include:
- Small amounts of hydrocarbons that exist in gaseous phase in natural underground reservoirs but are liquid at atmospheric pressure after being recovered from oil well (casinghead) gas in lease separators and are subsequently commingled with the crude stream without being separately measured. Lease condensate recovered as a liquid from natural gas wells in lease or field separation facilities and later mixed into the crude stream is also included.
- Small amounts of nonhydrocarbons produced from oil, such as sulfur and various metals.
- Drip gases, and liquid hydrocarbons produced from tar sands, gilsonite, and oil shale.
Liquids produced at natural gas processing plants are excluded. Crude oil is refined to produce a wide array of petroleum products, including heating oils; gasoline, diesel and jet fuels; lubricants; asphalt; ethane, propane, and butane; and many other products used for their energy or chemical content.
An oil refinery unit that separates crude oil into different products according to their individual boiling point ranges. Distillation allows for the materials to be separated without being subjected to conditions that would cause cracking or decomposition.
Term applied to the differential between what a typical refined products mix would yield, and the value of crude. The common crack spread features a per bbl reference derived of 66.6% unleaded gasoline and 33.4% No. 2 oil. The resulting average is compared to the WTI number for the resulting “crack spread.” Crack spreads of 3:2:1 use three parts gasoline, two parts of distillate to one part of crude.
To close out a long or short futures position.
The cost to physically store crude or petroleum products, including storage fees, insurance, inspections and capital costs.
A pricing mechanism, commonly used by transportation firms. Takes an OPIS average, adds in a specific “cost” (i.e. freight or a mark-up) to create a buying price.
A statistical factor measuring how well any two markets (i.e. a cash market and a futures market) move in unison. A correlation coefficient of 1 would indicate a perfect 1-to-1 relationship.
The ability to perform those processes in gasoline production that adds octane. This process is considered more complex than basic distillation.
Term that describes a market which features higher prices for more distant delivery. If prompt crude is $18/bbl and delivery two months hence is $19/bbl, the market is said to be in contango. Contango market typically suggests cheaper prices in the near-term because of oversupply or other signs of market weakness.