Here we go again. Some more buzzwords used in the fuels industry.
Bullish - When the market or stock price is rising.
Bearish - When the market or stock price is falling.
Hedge - An investment to decrease the risk of opposing price movement in an asset.
Futures Market- an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date. Examples of futures markets are the New York Mercantile Exchange, the Kansas City Board of Trade, the Chicago Mercantile Exchange, the Chicago Board of Options Exchange and the Minneapolis Grain Exchange. Originally, trading was carried on through open yelling and hand signals in a trading pit, though in the 21st century, like most other markets, futures exchanges are mostly electronic.
RVP Gasoline - Reid vapor pressure a way to measure the volatility of gasoline.
Ethanol - A clear, colorless, flammable oxygenated hydrocarbon; a gasoline octane enhancer in the transportation industry.
Crack Spread- The difference in price of a barrel of crude and the products refined from it.
Upstream - Activities in the oil and gas industry which take place close to the supply. This normally includes exploration and production activities.
Midstream - Extracting oil from the ground (or seabed) is only the first step in its journey to an end-user. Companies that store and transport crude oil from wells to refineries make up the so-called midstream in energy production.
Downstream - Those activities in the oil and gas industry which take place away from the source of the supply. Downstream operations commonly include refining and marketing endeavors.
Normal Backwardation - When the futures price is below the expected future spot price. This is desirable for speculators who are net long in their positions: they want the futures price to increase. So, normal backwardation is when the futures prices are increasing.
Contango - When the futures price is above the expected future spot price. Because the futures price must converge on the expected future spot price, contango implies futures prices are falling over time as new information brings them into line with the expected future spot price.