Petroleum products play a key role in the global economy and their prices are one of the most important factors for many countries and companies. Understanding how crude oil and petroleum products are quoted on exchanges and what factors influence pricing is critical to successfully participating in wholesale international trade.
Price formation mechanism
The price of crude oil and petroleum products is formed on the world commodity exchanges where these commodities are traded. The main factors affecting price formation include:
Supply and demand: Stable supply and demand for crude oil and petroleum products are the key factors that determine their prices. Changes in production, geopolitical environment, and economic trends affect the balance between supply and demand.
Geopolitical developments: Tensions in oil-producing countries, conflicts, sanctions and political decisions can have a significant impact on the prices of crude oil and refined products.
Macroeconomic indicators: Economic growth, inflation, changes in exchange rates and central bank rates also affect oil prices.
Exchanges and quotations
There are several leading global exchanges where crude oil and petroleum products are traded:
New York Mercantile Exchange (NYMEX): One of the largest exchanges where futures and options on crude oil and other energy products are traded.
London ICE Futures Europe: This exchange specialises in trading oil and oil products, including petrol, diesel and fuel oil.
Dubai Exchange (DME): It provides trading opportunities for UAE crude oil.
Quotes for crude oil and petroleum products are usually expressed in dollars per barrel (for crude) or dollars per tonne (for petroleum products).
The ratio of crude oil and refined products traded between different exchanges may vary depending on region, market conditions and participant preferences. For example, in North America, NYMEX may have a larger market share, while in Europe and Asia, ICE Futures Europe may be more popular.
High trading volumes on global exchanges reflect the widespread interest in crude oil and petroleum products among investors, traders and companies. It also allows for liquidity in the market, which facilitates more efficient trading and risk mitigation.
Exchange quotes online
There are many online marketplaces around the world to track real-time quotes for oil and petroleum products. Some of the most popular ones include:
- Investing.com: This resource provides a wide range of financial information, including up-to-date quotes for various petroleum products (www.investing.com).
- Bloomberg: Bloomberg offers up-to-date news, analysis and quotes on various energy products, including oil (www.bloomberg.com).
- OilPrice.com: This resource specialises in energy news and analysis and provides quotes for oil and other energy products (www.oilprice.com).
- TradingView: TradingView provides charts and quotes for a wide range of financial instruments, including oil (www.tradingview.com).
- CNBC: CNBC provides up-to-date news and quotes for oil and other important financial instruments (www.cnbc.com).
These platforms provide real-time access to up-to-date information on crude oil and petroleum product quotes, allowing traders and investors to keep abreast of the latest developments in the energy market.
Popular tools for traders
In the oil and oil products market, traders often use the following tools:
Futures: Contracts that obligate a buyer to buy or sell a specific quantity of crude oil or petroleum products at a specific price and time.
Options: A contract that gives the right, but not the obligation, to buy or sell crude oil or petroleum products at a certain price at a certain point in time.
CFD (Contract for Difference): A contract that allows a trader to speculate on changes in the price of oil or petroleum products without owning the actual commodities.
Platts: Leading Source of Energy Market Quotes
www.spglobal.com
Platts is one of the leading organisations providing information and analysis on energy markets, including oil and oil products. It was founded in 1909 by William Platts in the United States and has since become an authoritative source of data for the world’s energy traders, analysts and companies.
Platts History
Platts began its history by publishing daily railway fuel prices and later expanded into the international oil and petroleum product markets. In 2000, Platts was acquired by McGraw Hill Financial and became part of S&P Global in 2011.
Today, Platts is known for its extensive data on energy markets, including quotes for crude oil, petrol, diesel, fuel oil and other products. Its information and analyses are widely used by companies involved in the extraction, refining, transport and trading of oil and petroleum products.
Popularity of Platts
The popularity of Platts is due to several factors:
Data reliability: Platts provides up-to-date and reliable information on oil and petroleum product prices, enabling traders and companies to make informed decisions.
Objectivity: The organisation is known for its independence and objectivity in market assessment, making its data trusted and authoritative.
Broad market coverage: Platts monitors energy prices around the world, allowing it to provide a comprehensive picture of the global oil and oil products markets.
Innovative solutions: The organisation is constantly developing new tools and technologies to analyse markets and provide clients with the most useful information.
Popular Platts on Global Markets
Platts covers a wide range of geographical markets, providing information and quotes for different regions of the world. Some of the most popular Platts by geography include:
- Platts North Sea Dated (Brent): One of the most widely used benchmarks for crude oil prices. Platts North Sea Dated prices North Sea crude including Brent, Forties, Oseberg and Ekofisk (BFOE).
2 Platts Dubai: This benchmark is used to price crude oil from the Gulf and several other regions in the Middle East and Asia. - Platts USGC (Gulf Coast): This benchmark reflects prices for oil produced on the Gulf Coast and other regions of the southern coast of the United States.
- Platts Rotterdam: Reflects the prices of refined products traded at Rotterdam refineries, one of the largest trading hubs in Europe.
- Platts Singapore: It is the main source of information on crude oil and petroleum product prices in the Asia-Pacific region.
Using Formulas Based on Platts Quotes
Formulas based on Platts quotes allow traders and companies to create flexible and transparent trading conditions for oil and petroleum products. These formulas typically use the following structure:
Price = Platts Quotation ± Discount / Markup
- Platts Quote: This is the base price specified in the formula and determined by the relevant Platts for a particular product and region.
- Discount/Price: This is the percentage change applied to the base quote to take into account various factors such as product quality, delivery terms, trade volume and other market factors.
Advantages of Using Formulas Based on Platts Quotes
Transparency: Using Platts quotes makes the price more transparent and understandable to all traders.
Adaptability: Formulas allow prices to quickly adapt to changing market conditions, such as changes in Platts quotes or external factors.
Flexibility: Traders can customise formulas to meet specific needs and deal conditions.
Minimise Risks: Using formulas based on Platts quotes helps minimise the risks associated with fluctuations in the price of oil and oil products on global markets.
Thus, linking prices to Platts quotes using formulas is a common and effective practice in international oil and oil products trading, providing transparency, flexibility and minimising risks for market participants.
All this makes Platts an indispensable tool for traders and companies operating in the energy market, and confirms its status as the leading source of oil and oil products quotes.
In conclusion, oil and petroleum product quotes are shaped by many factors, and understanding them is key to successful trading in the global markets. Traders use a variety of tools and follow news and events to make informed decisions and manage risk.
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