Friday, July 23, 2010

What is the (premium,discount) when we sale or buy crude oil?

When people refer to a premium or discount on crude oil, they are referring to a difference paid in the price relative to the ';benchmark'; price. The ';benchmark'; price quote you see on the television and is traded on the NYMEX is West Texas Intermediate (WTI). This is a light, sweet crude. It yields a lot of high value gasoline and jet fuel with minimal refining intensity. Most oil sold in the world is slightly different and usually trades at a discount to reflect the refining intensity required to produce usuable/valuable products.

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