Understanding Fuel Indices

The oil industry has two main, widely-used fuel indices, Argus Media (“Argus”) and S&P Global Platts (“Platts”). Each of these two companies report daily price assessments for oil products, as well as other commodities, worldwide. These assessments are compiled, throughout the day, of the numerous bulk trades being completed by commodity traders and give refiners, wholesalers and end-users a benchmark for each specific product in every region of the world. In addition to releasing pricing data, these companies, along with others, write and release news articles to keep everyone apprised of what is happening minute-by-minute in the commodities world.

When looking at commodity exchanges/reporting, there are multiple levels that feed off each other, but correlation can vary:

· International – NYMEX

o The NYMEX reacts to international news and developments

· Region-Specific – Argus and Platts

o Argus and Platts reflect developments regionally or by PADD, or Petroleum Administration for Defense Districts

o There are 5 PADDs in the United States

· City-Specific – OPIS

o OPIS, or Oil Price Information Service, breaks down their pricing to the city level

If you are active within the oil markets, there is a good chance you have heard of Argus and Platts. Within the United States, these two indices are used as a point of reference for refiners and wholesalers when it comes to pricing out rack and contracts to their customers. These two indices paint an accurate picture of how supply levels look in each region. On days when the reported prices are weaker than the NYMEX move, supply is outpacing demand and, on days reported prices are stronger than the NYMEX move, demand is outperforming supply.

Guttman’s fixed programs can help our customer partners protect themselves against days when Argus and Platts report stronger moves than the NYMEX. Not only do these programs mitigate, or even eliminate price hikes, but they allow our customers to protect their budgets as well. New and existing customers, please reach out to a Guttman sales representative to find out more about Argus and Platts, as well as the programs we offer that can be an optimum fit for your company’s needs.

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