Platts Glossary of Terms

Platts
Arab Heavy (Hv.)
Arab Light (Lt.)
Azeri Light
Azeri Light CIF Augusta
Brega
GOSM Gulf of Suez Mix
Iran Light
Iran Heavy
Kirkuk FOB Ceyhan
Kumkol CIF Augusta
North Sea Basket
Novo-R'dam (Novorossiisk-Rotterdam)
Saharan Blend FOB
Siberian Light CIF Augusta
Souedieh or Syrian Heavy
Syrian Light
Tengiz CIF Augusta
Turkmen Blend CIF Augusta
Urals differential to Dtd Brent
Urals ex-Baltic Sea CIF R'dam
Urals ex-Black Sea CIF Augusta
Urals ex-Novo
Urals Export Basket
Urals ex-Vents
Urals FOB Novorossiisk
Urals FOB Ventspils
Urals Pipeline Average
Zarzaitine
Zuetina

(.)
(.)

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- (-)

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x-Med 130kt
x-Med 80 kt
x-UKC 130 kt
Weekly prices' differentials to Dated Brent are
assessed once a week on Friday, and then move in
line with Dated Brent Monday through Thursday.
If Friday is a holiday then the new assessment will
be made on the business day preceding the start of
the holiday.
This represents the differential between a basket
of Tengiz FOB, Saharan Blend FOB and Azeri
Light FOB on the one hand and Urals FOB
Novorossiisk on the other hand
This represents the differential between the North
Sea Basket and Urals FOB Ventspils
Es Sider and Zuetina priced on a monthly average
of Dated Brent. Arab Lt and Hvy are priced FOB
Ras Tanura off the IPE's Brent weighted average
(BWAVE) and are for European destinations. Iran
Lt OSP is for NWE, FOB Kharg Island.

x- 130 .
x- 80 .
x- 130 .

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-
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-
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. .
IPE
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, .

Aframax

; Aframax

Tankers in the 75,000-120,000 dwt size range. AFRA is

Average Freight Rate Assessment. Aframax ship are
traditionally employed on a wide variety of short and
medium-haul crude oil trades.

75,000-120,000. AFRA
.

AG - Arab Gulf

This phrase and its abbreviation AG are current in some

sectors of the oil industry, especially the tanker world, as a
designator for the Persian Gulf, which is the correct name in
international law for the body of water bordered by the
UAE, Saudi Arabia, Qatar, Kuwait, Iraq and Iran. Note that
there is a Gulf of Arabia which is not the same piece of sea
as the Persian Gulf.

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,

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American style option

(
An option which can be exercised by the buyer (holder) at )
anytime during its life

,
()
.

ANS

ANS

Alaska North Slope crude oil.

,
.

API

Usually: American Petroleum Institute. But note that there is

an Italian oil company called Anonyma Petroli Italiana,
universally referred to in Europe as API.

,
Anonyma Petroli Italiana,

API.

API gravity

API

An arbitrary scale expressing the gravity or density of liquid

petroleum products devised jointly by the American
Petroleum Institute and the National Bureau of Standards.
The measuring scale is calibrated in terms of degrees API.
Oil with the least specific gravity has the highest API
gravity. The formula for determining API Gravity is:
API gravity = (141.5/specific gravity at 60 degrees F)
131.5.

,

.
API.
API.
API:
API = (141,5/ 60 F)
131,5.

ARA

Amsterdam-Rotterdam-Antwerp. Abbreviation commonly

used in shipping to designate discharge or loading at one of
these three ports.

- -.


.

Aramco

Aramco

Technically refers to a now-defunct US-Saudi company. But

in practice widely used to designate the companys modernday descendant Saudi Aramco.

.
, Saudi
Aramco.

arbitrage

The simultaneous purchase of a commodity/derivative in

one market and the sale of the same, or similar,
commodity/derivative in another market in order to exploit
price differentials.

/
.

assessment

A Platts assessment is the product of a market survey and

the application of strict methodological rules to determine
the repeatable tradable price range for a commodity during
the assessed period. Assessment typically aims to zero in on
these typical transactable levels by discarding
unrepresentative market information (out-of-market bids,
offers and transactions), and the process differs in this
respect from indexation, which is an inclusive process,
averaging all available market information. Platts produces
indexes in highly liquid markets, for example North
American natural gas; and assessments in illiquid markets,
such as those for physical oil. Platts assessments typically
are published as a low-high range for each instrument. See
Platts Guide to Specifications and also Frequently Asked
Questions for details of Platts methodologies.

Platts

,

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( ,
);

,
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Platts
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Platts, ,

. Platts
Platts
.

at-the-money

An option whose exercise price is equal, or close to, the

current price in the underlying market

, ,
,

avails

Jargon, short for availabilities, and actually meaning

supplies.

Avails ( .) ,

backwardation

A market where the price for nearby delivery is higher than

for further forward months. The opposite of backwardation
is contango.

,
, ,
,
. , ,
.

availabilities,
.

barrel

A volumetric unit of measure for crude oil and petroleum

products. 1 barrel is 42 US gallons, 35 imperial gallons or
159 liters. There are roughly 7.33 bbl of crude oil to a tonne,
but the precise conversion obviously depends on the specific
gravity of the oil.

. 1 42
, 35 159 .
7,33 .
, , , ,
.

base load

The minimum amount of electric power delivered or

required over a given period of time at a steady rate. The
minimum continuous load or demand in a power system
over a given period of time

,

.
(
)
.

base load capacity

The generation units normally used to meet demand aroundthe-clock.

base load plant

A plant normally operated to take all or part of the minimum

continuous load of a system, and which consequently
produces electricity at an essentially constant rate. A base
load plant typically has relatively high fixed costs and low
unit operating costs. Traditionally, nuclear plants have been
considered as base load plants.

,

;
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.

BBQ

BBQ

A composite of Bonny, Brass River and Qua Ibo crudes

from Nigeria.

bearish

Believing that a price will fall. Also describes a market

which shows signs of falling.

() (
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.

enchmark

bid

A proposal to buy a commodity/derivative at a specified

price.

bill of lading

Documentation legally demonstrating a cargo has been

loaded. The bill of lading is signed by the captain of the ship
and the contract supplier. Abbreviated as B/L.

.
- B/L.

blendstock

A component combined with other materials to produce a

finished refined product.

,
.

breakout

A sudden breakout of prices from a chart pattern that has

been forming for some time. It marks the end of a period of
uncertainty. The breakout point can often be used to guess
how far prices will go in that direction.

,
.

.

.

Brent blend

The most commonly traded North Sea crude oil. Brent has
an API of about 37.5. The blend is technically a mix of
crude from the Shell UK-operated Brent field and the BPoperated Ninian field. The blend is, however, commonly
referred to simply as Brent.

.
37.5.
,
Shell UK
, , BP
Ninian. , ,
.

BS&W

Bottom sediment and water, usually expressed as a

percentage by weight. Tanker expression, acceptable on
second reference.

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,
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bullish

Believing that a price is going to rise.

(
).

bunker C

A residual fuel used as ship's fuel, which usually has a high

sulfur content and high viscosity.

,
,
.

BWAVE (Brent Weighted Average)

C+F

Cost and Freight. A pricing basis in which the buyer pays

the cost of the cargo and the freight costs. See also CIF,
FOB and out-turn.

.
.
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call option

( )

An option that gives the buyer (holder) the right but not the
obligation to buy a specified quantity of an underlying
futures at a fixed price, on or before a specified date. The
grantor of the option is obliged to deliver the future at the
fixed price if the holder exercises the option

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candlesticks

A Japanese charting system which maps the open- high-lowand close of periodic price movements. A box is drawn
around the open and close, and painted white if the close is
above the open, and black if the close is below the open. The
boxes and their little heads and tails look like candles and
their wicks. Candlestick studies are full of exotic terms like
Morning Star and Dark Cloud Cover; these describe how the
black and white candles look, and can be interpreted as buy
or sell signals.

,
,
, .

,
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.

.
,
(Morning Star)
(Dark Cloud Cover);

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capacity margin

The amount of capacity above planned peak system demand

available to provide for scheduled maintenance, emergency
outages, system operating requirements, and unforeseen
demand.

,

, ,
.

capacity release

The temporary relinquishment of firm transportation

capacity on a pipeline. The capacity holder releases the

capacity in the open market and accepts bids for use of that
capacity over a specific, limited period of time.

.




.

capacity relinquishment

The permanent relinquishment of firm capacity on a

pipeline.

caribs

Tanker market abbreviation for Caribbean.

aribs ( .) -
.

cash and carry

cash and carry

An arbitrage transaction involving the simultaneous

purchase of a cash commodity with borrowed money and the
sale of the appropriate futures contract.

,

.

cash market

The physical market underlying a futures or options

contract.

,
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cash settlement

The settlement of futures or options by paying a cash

difference, rather than taking/making physical delivery.

, ,
.

cat cracker

A catalytic cracker.

cat gasoline

A gasoline blending component made in a cat cracker.

,
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catfeed

Feedstock to a catalytic cracker, usually vacuum gasoil.

,
.

argo

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)

channel

Like it sounds, a channel in which prices are moving.

Parallel trendlines are drawn along the lows and highs of a
price chart, forming a channel in which prices move. The
trendlines form areas of support and resistance. Depending
on the trend, the channel can be a downchannel or an
upchannel.

,
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.

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China main port/ CMP

/ CMP

Most petrochemical trade in China is carried out basis China

Main Port, rather than a specific port.

- .

CIF

Cost, insurance and freight charges for shipping products.

CIF prices include these charges. See also +F, FOB, outturn.

,
. .
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clearing

The process of matching trades, settling trades and provision

of a guarantee for traded contracts, often a service performed
by exchanges

,

;

clearing fee

A fee charged by a clearing house for clearing trades

close out

Finalizing a transaction by making an equal and opposite

trade to an open position

cloud point

The temperature at which a fuel, when cooled, begins to

congeal and take on a cloudy appearance caused by the
bonding of paraffins.

,
-
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CNR

CNR

Charterer Not Reported. A tanker market term.

. .

COA

Contract of affreightment between ship owner and charterer.

Commodity Channel Index

(CCI)

CCI measures the variation of an instrument's price from its

mean. High / low values indicate that prices have moved too
far from their mean. The usual range is +/- 100 and anything
outside this is overbought or oversold.

CCI
.
/

,
. +/- 100,
,
.

condensate

Very high API crude "oil", which in its natural state is in

gaseous form but which condenses to liquid upon
production. OPEC has for many years argued over the
precise definition of condensates, since it does not include
them in individual countries crude production quotas. See
NGL.

API,

,
.
,

. . NGL.

congestion

When prices trade at similar levels over a period of time, the

chart becomes cluttered with business at these levels and is
referred to as 'congested'. Congestion areas are often seen as
providing support/resistance. They are the levels at which,
rather than breaking into new ground, prices tend to bog
down and become trapped.

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,
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connection

The physical junction (transmission lines, transformers,

switch gear, etc) between two electric systems permitting the
transfer of electricity

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,

consolidation

All this means is that prices are moving in a broadly

sideways range after a sharp move in one direction. If the
prices have risen sharply, the gains are consolidated, often
for several days after the major move.

,

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,

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contango

Market situation where prices are higher for forward

delivery dates than for nearer delivery dates. See also
backwardation.

C , /
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contract

A binding agreement between a buyer and a seller in a

transaction.

,
.

ontract for differences

Crude oil swap, tied to published price assessments, which

exchanges floating short-term risk for fixed risk.

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,
.

contract price/ CP

(CP)

Periodic (monthly/quarterly/annual) price agreed between

sellers and buyers of commodities for term business. Often
abbreviated to CP. Most oil contract prices are "floating",
that is they are tied to spot market assessments published by
Platts or other market pricing services rather than set at
outright levels.

, ( /
/)

.
CP.
; ,
,
Platts ,
,
.

crack spread

The simultaneous purchase or sale of crude against the sale

or purchase of refined petroleum products. These spread
differentials which represent refining margins are normally
quoted in dollars per barrel by converting the product prices
into dollars per barrel and subtracting the crude price.

.

, , ,


.

cracked

Adjective normally referring to molecules broken by nondistillation refining processes. See cracking.

,
,
. . cracking.

cracking

Refining process to break large molecules into smaller ones.

Principal cracking techniques are:

,
.
:

Thermal cracking:

Heating of hydrocarbons to very high temperatures, usually

above 450 C. Thermal cracking is no longer widely used,
except in:

, , 450 C.

, :

Delayed Coking:

Thermal cracking of atmospheric/vacuum residues to make

electrode grade coke.

Catalytic cracking:

Cracking using catalysts to enhance molecule breaking,

particularly in the production of high octane gasoline.

,
,
.

Hydrocracking:

While thermal and catalytic cracking produce shorter

hydrocarbon molecules largely by disposing of the excess
carbon atoms, hydrocracking inserts hydrogen atoms to
achieve the same effect.

;

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Steam cracking:

A petrochemical process which produces olefins,

particularly ethylene, and, in some cases, aromatics. Similar
to thermal cracking

,
, ,

Co-Cracking:

A petrochemical process in which the c4 stream from an

ethylene plant is recycled into the feedstock.

,
4
.

crack

Crude Oil API (American Petroleum Institute) API

quality
Crude stocks

currencies

The following are standard abbreviations used by Platts.

Currency Standard Telex Print
US Dollar $ USD
Cents cts
Yen Yen
Australian dollar A$ AUD
Singapore dollar S$ S-DLR
Canadian dollar C$ CAN
Hong Kong dollar HK$ HKD
Euro EUR
British Pound GBP

Platts :

$ USD
cts
Yen
A$ AUD
S$ S-DLR
C$ CAN
HK$ HKD
EUR
GBP

French franc FFr

Swiss Franc SFr
Belgian Franc BFr
Deutschmark/Mark DM
Spanish peseta PTA
Dutch guilder NLG
Norwegian Krone NOK
Danish Krone DKr
Swedish Krone SKr
Finnish Markka FIM
European Currency Unit ECU
Italian lire ITL
Greek drachma DRA
Austrian schilling SCH
Portuguese escudo ESC
Malaysian ringgit MR
Rubles Rb
UAE Dirham DH
Not abbreviated:

FFr
SFr
BFr
/Mark DM
PTA
NLG
NOK
DKr
SKr
FIM
ECU
ITL
DRA
SCH
ESC
MR
Rb
DH
:

Baht Thailand

Bolivar
Crown Czech Republic, Slovakia
Dinars Kuwait, Iraq
Dram Armenia
Egyptian Pounds
Forint Hungary
Irish Punt
Karbovanets Ukraine
Kwacha Zambia
Manat Azerbaijan
Peso
Rand
Real
Riyals Saudi Arabia, Oman, Iran
Rupee India
Rupiah Indonesia
Shekel Israel
Som Several former Soviet Union Muslim republics
Tenge Kazakstan
Turkish Lira
Won S. Korea
Yuan China
Zloty Poland

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,

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()

DAF

DAF

Delivered At Frontier. A popular INCOTERM among

eastern European petrochemical producers. A different
railway gauge means product has to be transshipped before
continuing on into western Europe.

INCOTERMS,

. -


.

Dated Brent Weekly Average

deliverability

The volume that a particular well, storage field, pipeline or

distribution system can supply during a 24-hour period.

, , ,

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delta hedging

The process whereby the grantor of an option decides to buy

or sell more or less of an underlying futures contract in order
to protect against being declared upon by the options holder.
If delta hedging, the grantor of a call option will buy more of
the futures contract if it rises in value towards the strike
price (as the probability of being declared upon rises
towards 100%). The grantor of a put option will typically
sell more of the underlying futures contract if it slides in
value (as the probability of being declared upon rises
towards 100%)

, ,
,
,
,
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(
100%). ,
, ,
,
(
100%).

delta neutral

A state where the grantor of an option has balanced the

probability of being declared upon through buying/selling
the underlying futures contract.

, , ,

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demand

In power: the rate at which electricity is delivered to or by a

system at a given instant or averaged over a designated
period, usually expressed in kilowatts or megawatts.
In oil: the rate of consumption of refined products, normally
measured in millions of barrels per day, or in million tonnes
per year.

: -
;
, , .

; , ,
.

demand side management (dsm)

All activities or programs undertaken by an electricity

system or consumers to influence the amount and timing of
electricity use.

,


.

demurrage

The detention or delay of a vessel in loading or unloading

beyond the time agreed upon. Demurrage charges are
usually incurred for any delay.

. (
)
.

design day

A 24-hour period of demand used as a basis for planning gas

capacity requirements.

,

.

DFLs (Dated to Frontline)

a
IPE

Differential

The difference between two prices. A large and increasing

percentage of all oil transactions are effected on the basis of
differentials, also known as spreads, rather than outright flat
prices.

.

,
, .

discount

An amount agreed between buyer and seller to be subtracted

from an existing benchmark.

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.

double bottom

A bullish reversal pattern characterized by two lows at

roughly equal value.

double top

A bearish reversal pattern characterized by two highs at

roughly equal value.

Dow theory

Theory of market movement developed by Charles Dow that

prices move in defined trends of successive higher peaks and
higher troughs in an uptrend, and lower peaks and lower
troughs in a downtrend. Dow divides trends into primary,
secondary and minor. Volume patterns are associated with
specific points in a trend. Dow theory is the foundation of
most modern technical theory.

, :

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downstream

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.

A price pattern characterized by successive falling highs and ;

downtrend

falling lows.

,
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DWT

Deadweight tonnage. See tankers.

.
.

E-4

E-4

Russian high sulfur straight-run feedstock. Formerly called

F-10.

. F-10.

economy energy

Energy sold on a non-firm basis and subject to recall at the

discretion of the selling party

,

.

EFP

Exchange of futures for physical: refers to the exchange of a

futures position for a physical (swap) position.

:

( ).

environmental impact study

A written report, compiled prior to a production decision,

which examines the effects proposed mining activities will
have on the natural surroundings of an exploration property.
Abbreviates to EIS.

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,

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exercise

The procedure by which an option holder takes up the rights

to the contract and is delivered a long (call) or short (put)
futures position by the grantor at a fixed price.

,
, ,
, ()
()
.

exit fee

A fee that is paid by a customer leaving a utility network

intended to compensate the utility in whole or part for the
loss of fixed cost contribution from the exiting customer.

, ,
.

,

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expiry (options)

()

The date by which an option holder must decide whether to

exercise or abandon an option.

, ,
.

exploration

farm-out

An interest in an oil or gas lease that is granted by the lease

holder to a third party.

.
,
.

FAS

FAS

Free Alongside Ship. Product is sold when the goods in

question are placed on the quay alongside the vessel. FAS is
often traded in the US polymer export market.

.
.
FAS
.

FCA

FCA

Free Carrier. The rail- and roadfreight equivalent of Free on

Board.

-. - Free on
Board,

FD

FD

Free Delivered. This is effectively the delivered end of an

FCA deal.

.
FCA .

firm energy

Energy sales which, although not subject to interruption for

economic purposes, may be interrupted under force majeure
conditions.

,
, ,
- (force majeure).

flag

A price chart pattern that looks like a flag-pole with a

rectangular flag hanging off it. It is often seen as a sign
that the trend is likely to continue after a brief consolidation.

,
.
,
.

force majeure

Denotes circumstances beyond the control of a company,

which force the breaking of a contract.

, .

Free Carrier

The rail- and roadfreight equivalent of free on board.

- (free on board),

.

Free on Board

Usually abbreviated to FOB. FOB prices exclude all

insurance and freight charges. Most oil is sold either FOB
(effectively priced at the loading port) or CIF (effectively
priced at the delivery port).

.

.
(
) (CIF) (
).

Freight in $/bbl

($/.)

Front-end market

Front-end market

Frontline

FT

FT

Firm transportation.

Fuel oil

Barges
Bunker

futures contract

An agreement to make or take delivery of a commodity at a

fixed date or strip of dates in the future, at a price agreed
upon at the time of dealing.

,
.

head and shoulders

A reversal pattern characterized by a high, a higher high, a

lower high, and a break below the line joining the lows
between the highs, the so-called neck-line.

,
,
, ,

, .

heavy crude oil

Has an API gravity of less than 28 degrees. The lower the

API gravity, the heavier the oil.

API 28 .
API, .

hedge

The reduction of risk by covering anticipated commitments

at a fixed price in the future through a futures or options
contract. Buyers and sellers can hedge

.
, .

Hormuz

The Strait of Hormuz is the sea-passage out of the Persian

Gulf between Iran on the eastern shore and the UAE and
Oman on the west.

hub

A geographical location where multiple participants trade

services.

,
.

initial margin

( )

The returnable collateral required to establish an options

position.

,
.

interruptible demand

The amount of customer demand that, in accordance with

contractual arrangements, can be interrupted by direct
control of the system operator, remote tripping, or by action
of the customer at the direct request of the system operator.

,

,

.

in-the-money

An option which has intrinsic value. A put option is in-themoney when its strike price is above the value of the
underlying futures contract. A call option is in-the-money
when its strike price is below the value of the underlying
futures contract.

, .
,

.
,
.

intrinsic value

The value to an option holder if (s)he were to exercise an

option today.

inverse head and shoulders

A bullish reversal pattern characterized by a low, a lower

low, a less low low, and a breakout to the upside.

,
,
,
.

IPE

IPE;

The International Petroleum Exchange in London.

kt

Abbreviation for one thousand tonnes.

landed cost

The total cost of oil off-loaded at a port, including duties,

fees and taxes.

, ,
, .

laycan

The range of dates during which a ship will load.

,
.

lifting

The act of loading petroleum or petroleum products at a

terminal or transfer point.

light crude oil

Has an API gravity higher than 33 degrees. The higher the

API gravity, the lighter the crude oil.

API 33 .
API, .

light ends

Group of petroleum products with the lowest boiling

temperatures, including gasolines and distillate fuels.

, .

LNG Liquefied Natural Gas

load

The amount of electricity delivered or required at any

specific point or points on a system. The load of an
electricity system is effected by many factors and changes
on a daily, seasonal, and annual basis, typically following a
pattern. System load is usually measured in megawatts
(MW).

,
.

,
, ,
.
().

load curve

A curve of power versus time showing the level of a load for

each time period covered. The horizontal axis is time and the
vertical access is load (MW).

. ,
().

load factor

The ratio of average load to peak load during a specific

period of time, expressed as a percent. The load factor
indicates to what degree energy has been consumed
compared to maximum demand or the use of units relative to
total system capability. An system's load factor shows the
variability in all customers' demands.

,
.

,

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load management

The management of load patterns in order to better use the

system. Generally, load management attempts to shift load
from peak use periods to other periods of the day or year.

. ,

load shape

Variations in the power load over a daily, weekly or annual

period.

, .

long

Traders are said to be long when they have contracted to buy

more of a commodity or instrument than they have
contracted to sell.

, ,

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.

long-run marginal costs

All costs associated with the lowest cost incremental unit

including variable production costs and capital costs.

,
,

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LR

LR

Large/long range tanker, 45,000-159,999-dwt. Divided into

LR1 (45,000-79,999-dwt), and LR2 (80,000-159,999-dwt).
See also tankers.

, 45,000159,999 . LR1 ( 45,000-79,999 )

LR2 ( 80,000-159,999). .
(tankers).

marginal cost pricing

A system of pricing designed to ignore all costs except those

associated with producing the next increment of power

generation. Sometimes referred to as incremental cost
pricing.

,
.

.

market-area storage, or hub

()

Storage facilities or hub located near gas users (markets).

,
() .

mark-to-market

To revalue futures/option positions using current market

prices to determine profit/loss. The profit/loss can then be

paid, collected or simply tracked daily (see variation
margin).

/. /
, ,
(. - variation
margin).

Med

Market abbreviation for Mediterranean.

,
.

mt

Metric tonne.

NWE

Oil and petrochemicals market abbreviation for Northwest

Europe.

, - .

NYH

NYH

New York Harbor.

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NYMEX

NYMEX

New York Mercantile Exchange. Also known in the energy

industry as "the Merc".

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the Merc.

o/r

Operating rate.

offer

An indication of willingness to sell a specified amount of a

commodity at a specific price

Official Selling Prices

off-peak

Light load hours. The time of the day when an power system
would experience its lightest load, usually in the middle of
the night

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offset

An offset deal is, normally, one in which a vendor

government "offsets" the cost of an arms sale to a purchaser
government by undertaking to invest in the purchaser
country (or to persuade vendor country companies to do so).
Offset investment is normally not in the arms sector, and
typically involves technology transfer.

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offshore

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On Balance Volume

OBV is a momentum indicator relating volume to price

change. If prices rise, volume is considered up-volume; if
price, it is considered down-volume. Up-volume is added to
the cumulative total, and down-volume is subtracted.

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OPEC

Full name is The Organization of the Petroleum Exporting

Countries. Group of crude-producing countries which has
used its collective weight of production since OPEC was
founded in 1960 in an attempt to influence oil prices.
Current membership (May 2000): 11 countriesAlgeria,
Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi
Arabia, UAE, Venezuela. Ecuador resigned from OPEC in
1992, Gabon in 1995. Founder members were Saudi Arabia,
Iran, Iraq, Kuwait and Venezuela.

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open interest

The number of contracts left open in a market which need to

be closed out or taken through to delivery

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open interest

Open interest is the number of open contracts on a given

future or options contract. Longs or shorts that have not been
closed out are OI. Short-covering/profit-taking will tend to
reduce OI.

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open outcry

A trading system in which members trade verbally on a

trading floor

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operating reserve margin

The amount of unused available capability that can be

applied to the system within ten minutes at peakload for a
utility system, expressed as a percentage of total capability

optimization

A technique used by technical analysts to decide on which

measures work best in their specific markets. For instance,
the 40-day moving average might generate good signals for
oil and commodity markets, but not foreign exchange
markets. BY using optimization software, traders hope to
work out which measures work well for their specific
instruments.

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utright price

out-of-the-money

An option which has no intrinsic value. A put option is outof-the-money when its strike price is below the value of the
underlying futures contract. A call option is out-of-the
money when its strike price is above that of an the
underlying futures contract

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out-turn

The quantity of oil unloaded from a vessel at its discharge

point. Out-turn pricing allows the buyer to pay only for the
oil measured into receiving tanks. The amount of oil loaded
on the tanker becomes irrelevant.
See also CIF, FOB, C+F, FCA etc

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. CIF, FOB, C+F, FCA ..

P&C

Private and confidential. Used by commodities traders to

describe non-public transactions.

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P/C

P/C

Part-cargo.

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physical delivery

The transfer of ownership of an underlying commodity

between a buyer and seller to settle a futures contract
following expiry.

pl

Pipeline.
See prompt.

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prem

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Abbreviation for Premium.

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premium

An additional amount agreed between buyer and seller over

and above an existing benchmark. Also, the price paid by an
option holder to an option grantor.

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Prompt, PPT

, PPT

A prompt cargo describes a cargo available for immediate

lifting (one to two days). Prompt tonnage refers to tankers
available to lift cargoes immediately. The tanker and
petrochemical worlds abbreviation is PPT.

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PPT.

put option

An option that gives the holder the right (but not the
obligation) to sell a specified quantity of the underlying
instrument at a fixed price, on or before a specified date. The
grantor of the option has the obligation to take delivery of
the underlying instrument if the option is exercised.

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puts/calls ratio

The ratio of puts to calls in an options market.

quota

OPEC sets individual crude oil production quotas for each of

its 11 members. These quotas do not include production.

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rally

()

A rapid rise in a price.

random walk

Theory that market prices move randomly around a main

trend, in other words, that the volatility is arbitrary.

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Rate of Change of Prices

This is a simple momentum-type indicator. It is the simple

momentum over n days divided by the price n days ago.

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ref

Market abbreviation for refinery, used for example in

contracts specifying material sold ex-refinery: ex-ref.

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(;
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In oil, a plant, usually comprising distillation units and a
refinery

variety of additional specialist units, for the manufacture of

so-called refined products from crude oil. Major refined
products include naphtha, gasoline, gasoil (heating oil), jet
fuel, low sulfur and high sulfur fuel oil.
In copper and lead, a refinery is a plant which further
purifies metal produced in a smelter. In zinc, it is a plant
which produces purer metal than could be produced in a
smelter. In aluminum, it denotes a plant which refines
bauxite into alumina.

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Reserves

The calculated quantity of hydrocarbons or minerals which

can be extracted profitably from a deposit, classified
according to the level of confidence that can be placed in the
data. Standard classifications are:
Proven reserves Reserves that have been sampled
extensively, for example--in mining--by closely spaced
diamond drill holes or by underground working giving an
accurate picture of size and quality of reserves. Also called
measured reserves. In oil, proven reserves are an estimate
based on seismic and other exploratory data, linked to an
assessment of economic and operating viability.

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Recoverable reserves In oil and gas, the portion

of a fields total estimate reserves that can
actually be recovered from the field using
currently available technology. Recoverable
reserve estimates are dependent on factors such as
reservoir pressure and the density of strata.

Probable reserves Valuable mineralization not sampled

enough to estimate accurately the terms of tonnage and ,
grade. Also called indicated reserves.

Possible reserves Valuable mineralization not sampled
enough to estimate accurately its tonnage and grade, or even
.
verify its existence. Also called inferred reserves. In oil,
possible reserves are an estimate of reserves from an ,

undrilled site or one that has not bee seismically tested.
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reservoir

In oil, a naturally occurring geological formation containing

hydrocarbon. In power, a structure (usually a dam) which
stores water for later use in the production of electricity.

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resistance

A price at which sellers are likely to enter the market in an

uptrend.

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RNR

RNR

Tanker abbreviation for rate not reported.

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roll over

The transfer of a position from one futures period to another

involving the purchase (sale) of the nearby month and
simultaneous sale (purchase) of a further-forward month.

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settlement price

A price established at the close of a trading day used to

calculate the settlement of futures contracts.

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short

Traders are said to be short when they have contracted to

sell more than they contracted to buy.

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sour/sweet crude

Definitions which describe the degree of a given crude's

sulfur content. Sour crudes are high in sulfur, sweet crudes
are low.

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spill

Release of water from a reservoir over a spillway rather than

putting it through turbines to generate electricity. A spillway
is the overflow structure of a dam

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spot market

A market where goods are traded for immediate delivery

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SPR

Strategic Petroleum Reserve in the US.

spread

The difference between two prices, either across time or

between commodities or instruments.

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spread (options)

()

An option trade in which two or more open positions are

established in order to trade the differentials and offset risk.
Option spreads may use different strike prices and/or expiry
dates.

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Spread-trading

Buying one instrument/commodity and selling another, with

a view to profiting from the change in the gap between the
two markets.

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storage

In oil: typically onland tankage facilities for short- or longterm storage of crude or products; sometimes used in
economic parlance interchangeably with the concept of oil
stocks.
In natural gas: facilities used to store natural gas which has
been transferred from its original location. Usually consists
of natural geological reservoirs like depleted oil or gas
fields, water-bearing sands sealed on top by an impermeable
cap rock, underground salt domes, bedded salt formations,
or in rate cases, abandoned mines.
An investment with a cost recovery schedule that was
initially approved by regulatory action that subsequent
regulatory action or market forces has rendered not
practically recoverable. Costs that utilities are currently
permitted to recover through their rates but whose recovery
may be impeded or prevented by the advent of competition
in the industry.

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storage
oil stocks
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strike price

The price at which an option holder has the right to buy or

sell an underlying commodity/derivative.

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Suezmax

; Suezmax.

support

A price at which buyers are likely to start buying in a

downtrend.

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surplus energy

Energy generating capability that is beyond the immediate

needs of the producing system. This energy may be sold on
an interruptible basis or as firm power.

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Sweet/Sour Differentials

Sweet/Sour Med

Sweet/Sour NWE

tariff

Rates an regulated entity will charge to provide service to its

customers as well as the terms and conditions that it will
follow in providing service.

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throughput

The volume of gas flowing through a pipeline, ore processed

by a concentrator etc.

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time value

()

The time component in a premium for an option art.

Typically the time value of an option declines as it moves
closer to expiry.

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timecharter

The chartering of a tanker or other freight vessel for a period

of time rather than for a specific voyage.

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tonne

The standard Platts abbreviation is mt.

A tonne, or metric ton, sometimes tautologically referred to
as a metric tonne, is defined as the weight of one cubic
meter of water. Rough-and-ready barrel-tonne conversion
factor is 7.33 barrels of crude to one tonne, but obviously
depends on the specific gravity of the crude.

Platts:
(mt).

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treatment/refining charges

The fee paid by a miner to the smelter/refiner which

upgrades the mines concentrate output. Abbreviated to
TC/RCs on second reference. Smelting/refining contracts
also typically include escalators, which adjust the charges
up or down in line with fluctuations in the market price of
the metal in question. See also Custom smelter.

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trend

"The trend is your friend." A trend at its most basic consists

of a situation in which prices move more in one direction
than another. Many technical measures attempt to discern
when a price is moving in a trend, punctuated by minor
corrections, and when it is simply trendless.

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trend lines

Lines drawn on a price chart linking subsequent lows in a

downtrend and subsequent highs in a uptrend.

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turnaround

A refinery or petrochemical plant is said to be "in

turnaround" when it is taken out of service of maintenance,
usually planned.

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UKC

UK-Continent. Tanker market term for the UK and

northwest European region closest to it.

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VLCC

VLCC

Ultra large crude carrier; with a capacity of 320,000-600,000

dwt. See tankers.

, 320,000-600,000 . .
tankers.

uncovered position (futures)

()

Where a long market player has bought more of a

commodity than he has agreed to sell, or where a short
market player has sold more of a commodity than (s)he has
to deliver.

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uncovered position (options)

()

When the grantor of an options position has no cover in the

underlying futures market against a price swing in the
holder's favor (see delta hedging).

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upstream

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uptrend

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A price pattern characterized by subsequent rising highs and
rising lows.

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USAC

Tanker abbreviation for US Atlantic Coast.

USAC ( .) -
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USG

Tanker and market abbreviation for United States Gulf,

more properly known as the Gulf of Mexico.

USG ( .) -
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USWC

Tanker and market abbreviation for US West Coast.

USWC ( .) -
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variable costs

The total costs incurred to produce energy, excluding fixed

costs which are incurred regardless of whether the resource
is operating. Variable costs usually include fuel, increased
maintenance and additional labor.

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variation margin

Profits and losses on open positions which are calculated

daily by the mark-to-market process, which are then paid or
collected daily.

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viscosity

Measure of a liquid's resistance to flow. There are a number

of viscosity scales in current use.

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VLCC

VLCC

Very large crude carrier; with a capacity of 200,000-320,000

dwt. See tankers.

, 200,000320,000 . . tankers.

Calculate the exponential moving average of the difference

volatility (Chaikin's)

between the daily high and low, lets call this 'range'.
Volatility = range now minus range n days ago / range n
day's ago.

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volatility (historical volatility)

(
The degree to which a particular price has fluctuated in the )
past.

volatility (options)

()

A value attributed to an underlying futures contract which

determines the premium that is set by the grantor. Includes
an element of historical volatility, and the volatility which
the grantor of an option believes will still be seen in that
futures contract.

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Waves (m)
Weather Outlook
Wind (kmh)

()

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weighted moving average

The average of prices over a certain period, but weighted to

give more importance to the latest price. So, if it were a 5day MA, the latest price might be weighted by a factor of 5,
yesterday's by a factor of 4, the day before by 3 times, the
day before twice, and before that, the simple price. Different
weighting systems can be used.

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WTI

WTI

West Texas Intermediate crude oil. WTI crude is deemed to

be traded at Cushing, Oklahoma. Traders typically refer to
the NYMEX Light Sweet Crude futures contract as the WTI
contract, although the contract allows delivery of other
grades.

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NYMEX
WTI,
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