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Friday, January 27, 2012 9:14:58 PM Methodology Overview For over three decades, OPIS has been a news and pricing leader in the downstream refined products marketplace. We have served customers throughout the many industry segments - traders, suppliers, commercial end-users, wholesalers and retailers - with up-to-the minute, award-winning news, analysis and pricing that appears in our many published reports and on-line services. In that time, OPIS has become the only provider of U.S. spot, rack and retail prices - giving us a complete picture of the marketplace that is rivaled by no other petroleum information supplier. OPIS editors collectively have more than 175 years experience covering petroleum markets. Our editors know that our numbers are commonly referenced by the industry, but we remain at arms' length. OPIS does not invest in oil companies, speculate on oil prices or accept special favors. This document explains our methodology for price collection at all levels and the steps we take to ensure data integrity and accuracy. Anti-Trust Policy 
Price Discovery Data Integrity OPIS uses several levels of automation to make sure prices that have not changed at usual intervals are fresh. If a price has not changed in 48 hours, it is electronically flagged and a pricing specialist is alerted so as to track down whether the number still represents an active and meaningful listing. OPIS specialists pinpoint prices that are outside specified reasonable parameters to avoid displaying inactive prices where product may not be available or where special circumstances may dictate that the number is not representative of where most wholesale commerce is taking place. Products tagged as "out-of-product" will not be part of the OPIS lows, highs or averages. Time Stamp (all times are ET)
Rack Formats OPIS Terminal Display -- Dates back to 1996 when OPIS purchased Computer Petroleum Corporation (CPC). This format includes multiple-supplier listings for individual cities, even if a supplier consistently posts the same price at multiple terminals in a given metropolitan area. OPIS Terminal Display includes all terminal locations for any rack city to provide full supplier coverage. Rack Pricing History
OPIS Bottom Line Wholesale Pricing Price Discovery Bottom Line prices are contrasted against the OPIS benchmark low posted price to identify how much lower these Bottom Line prices are. Only markets where Bottom Line wholesale values below the OPIS benchmark low will appear. Bottom Line prices include TVAs and other discounts and are often contract prices between suppliers and purchasers reflecting volume discounts, although specific volumes are not reported. Data Integrity Time Stamp
Price Discovery Bulk Distributor prices are reported with a National Low, High and Average Pricing Index. Average Discounted prices are reported with a Regional Low, High and Average Pricing Index. Average Discounted prices are an "average" discounted price that some lubricant distributors are offered. None of the averages are "weighted" towards any particular product or supplier. The OPIS Lubricants Report also provides supplier Posted Paraffinic Base Oil prices, which are reported in U.S. dollars per gallon. Data Integrity Average lubricant prices are verified with lubricant distributors and confirmed monthly electronically. The discounted average is simply an average of all supplier prices. Posted Paraffinic Base Oil Prices are confirmed monthly with base oil suppliers and marketplace, at time of publication. Time Stamp Effective date of last supplier price changes, discounted prices, and posted paraffinic supplier prices are confirmed prior to the 1st business day of each month published release. Price Discovery The OPIS retail data is relied on by some of the top companies in the country to provide consumers with the most accurate and timely information available including AAA, Microsoft, Mapquest, America Online, Garmin, Verizon, Sprint and many more. Data Integrity OPIS gets prices for most major retailers regardless of whether the station is company operated, jobber owned or dealer operated. Included in the feed are many of the more aggressive c-stores such as WAWA, QuikTrip, Maverik and Sheetz and most of the discount chains and supermarkets such as Wal-Mart, HEB and Kroger. OPIS has daily, weekly and monthly standard reports as well as customized reports which allow the user to slice and dice the data to get the view of the market they need to make smart decisions. In addition, OPIS has retail history going back as far as 1996 at the station level and can quickly roll the data up to nearly any geographic criteria you desire. Time Stamp The stations which currently don’t have the ability to be captured in real-time are updated via a batch file each morning and each price has the actual transaction date of the purchase. The daily feed through the batch process has transactions that are from 1-5 days old with the majority of prices being no older than 3 days. Price Discovery OPIS reports wholesale fuel prices by products as defined by EPA standards more so than by any type of product use. For example, the EPA defines low-sulfur fuels as having a sulfur content of less than 500ppm and Ultra Low Sulfur diesel as less than 15 ppm. Data Integrity Cost Plus is a method of purchasing fuel at the retail level where the fleet (buyer) and truckstop (seller) agree to a fixed margin above the cost of the fuel to the truckstop. This fixed margin protects both the fleet and the truckstop by ensuring the cost of fuel to the fleet and the profit to the truckstop is tied to a legitimate market index. The following is a list of the diesel fuel products OPIS tracks and some typical uses for those products. No. 2 Ultra Low-Sulfur No. 2 Low-Sulfur No. 2 High-Sulfur No. 1 Low-Sulfur No. 1 High-Sulfur Kerosene Red-dye Premium Diesel Winter Diesel Lubricity CARB Diesel Low Emissions Diesel NRLM Diesel This new fuel,called NRLM diesel for Non-Road Locomotive Marine, contains more than 15 ppm sulfur but less than 500 ppm sulfur and replaced the high-sulfur diesel fuel that exceeds 500 ppm and is still used for home-heating oil purposes. Where it exists, OPIS racks display NRLM diesel simply as “NRLM.” By 2010, all off-road locomotive and marine transportation fuel must meet NRLM specs. Time Stamp (all times are ET)
The Retail Diesel prices and the OPIS Gross Contract Average are used to create these numbers. The data is delivered Monday through Friday by email, the Internet, FTP and many third-party vendors. Price Discovery Data Integrity Time Stamp
OPIS Spot Replacement Index (SRI) Pricing The starting point for the OPIS "SRI" is the average of the prior-day's closing spot range in each of the seven U.S. spot markets. Each day OPIS's 14 editors survey traders and brokers and publish a FULL DAY range that represents their assessment of the value of spot transactions for gasoline and diesel fuel that day. OPIS has mapped over 250 rack markets back to their spot delivery points. From the OPIS Full Day Average Spot Price, OPIS then adds the existing pipeline tariffs based on the distance that product flows in the line from the spot entry point to the rack terminal location. It then adds in line loss due to evaporation in the line, terminaling and storage (transfer) fees if product moves from line to line, an estimated fee for proprietary additives, a cost of money factor, pipeline security charge and trucking fees for applicable markets where product is shipped using vehicles. For distillates, OPIS approximates the cost of various additives (lubricity, red dye, etc.) Today's SRI shows yesterday's closing spot price delivered into a specific market. Each rack that contains an SRI number displays the spot market to which the rack location is mapped. OPIS developed this methodology after more than a year of discussion with major oil suppliers, marketers and reseller. For more information on OPIS SRI click here.
Millions of gallons of gasoline, diesel fuel, heating oil, jet fuel, ethanol and other oil products are bought and sold each day in cash bulk markets. Commonly known in the trade as "spot" market prices, these transactions typically occur at the leading oil refining, barge and pipeline centers in the United States. These include the U.S. Gulf Coast, Group 3, Chicago, Atlantic Coast, Los Angeles, San Francisco Bay and Pacific Northwest. (View a complete at-a-glance listing of products and locations). Full-Day Philosophy “Typical” trading hours extend from 9 a.m. to 5:15 p.m. Eastern Time (6:00 a.m. to 2:15 p.m. Pacific Time). Deals that are received outside those hours are reviewed and evaluated for consideration in our full-day ranges. In order to meet publication deadlines, OPIS reserves the right to not accept deals as part of the final day’s product ranges if that information is sent to/received by OPIS after 5:15 p.m. (2:15 p.m. Pacific Time). We recognize ascertaining a spot product range can be subjective, and that there may be parties that dispute our numbers. Assessing markets requires judgment on the part of our editors, but those calls will be reviewed among experienced reporters and within the context of that day’s market. Ranges are only changed in the case of clerical errors such as typos or transposition mistakes. Definition of "Last" and "Mean" Editors confirm and record deals done for gasoline and distillate products that meet minimum pipeline/barge volumes specific to each geographic market. As the majority of the market is done on an EFP basis, we follow deals as basis discounts or premiums to the New York Mercantile Exchange. We consider fixed-price deals only if they fall within the full-day differential range based off the NYMEX at settlement, or to assess cash-for-cash "regrade" transactions. OPIS daily spot market assessments include information obtained from "back office deal logs" sent to us as part of our daily market price discovery. The information highlights actual transactions during the day, including price, volume, product, timing and counter party. OPIS has signed confidentiality agreements with some providers not to make this information public, except to use the transactions in our daily range of prices and weighted averages providing it meets our volume and timing criteria. OPIS editors compare the end-of-the-day deal logs with our confirmed deals through the day to insure we do not duplicate information. Editors respect the wishes of sources to remain anonymous in their activities in the market, and any information we receive regarding parties in deals is kept confidential. Ranges reflect actual transacted deals. In the case of confirmed trading followed by a shift in the market without a done deal, editors will consider the last deal recorded and weigh it in light of subsequent buyer and seller bids and offers. In the total absence of confirmed deals, we will use the input of the trading community to help us assess a viable “get-done” range and last value, and also consider the relationship the illiquid product may have with more actively-traded grades. Typically, the “lowest sell price” and the “highest bid price” will be used to help us arrive at our full-day range. Reports Ranges in these reports apply the highest and lowest done deal differentials versus the NYMEX at settlement, resulting in an absolute full-day trading range in cents per gallon. We do not round prices up or down. OPIS ranges track a prompt market east of the Rockies based on pipeline schedules and trading practices specific to each region. OPIS breaks out a “last” level in addition to its low-to-high range, as a way to give the market a last-seen reference point for the next day’s session. In addition, OPIS tracks a forward-range based on “any-month timing” for barrels that can be lifted in the same calendar or forward calendar month beyond the prompt cycle. West Coast reports also track prompt ranges, which are trades that reflect “any month/buyers option” transactions. “Buyers option” gives the buyer the choice of taking delivery in any of the four cycles throughout the month. In Los Angeles, OPIS identifies the prompt Kinder Morgan cycle for timing clarity but ranges are buyer option/any month lifting. OPIS also issues a Midday Spot Market Report for east of the Rockies markets that is an indication of the morning's trade based on a NYMEX "freeze" at approximately 11:45 a.m. Eastern Time. Midday market direction for implied cash prices is important for OPIS customers using this information to make rack pricing decisions. That range is simply an estimate of where the market has been trading or talked in the morning session and is published solely to provide a gauge of where implied absolute prices would be if a snapshot was taken at midday. Due to the incredible volatility in the futures and physical markets, alike, the midday indications are not included in the end-of-day, full-day assessments unless the midday numbers fall into a range covered by the full-day numbers. OPIS spot methodology for gasoline Reid Vapor Pressure has always designated RVP levels during the spring/summer months when federal and state mandates require lower RVP gasoline. During the fall/winter months, OPIS spot prices have always defaulted to the seasonal RVP requirements. Starting September 2, 2009, OPIS now designates gasoline RVP levels year-round, with designations specific to trading cycles by product by market. Weighted Averages OPIS shows weighted averages for prompt Gulf Coast conventional unleaded gasoline, including the 7.8 lb RVP supplemental grade when seasonal. We also show a weighted average for prompt ultra-low-sulfur diesel and jet fuel in the Gulf Coast. In the Los Angeles spot market, OPIS shows a weighted average for LAX jet fuel. Example of a Weighted Average: Done deals for Gulf Coast Unleaded Regular (9.0 lbs. RVP M2):
Under this scenario, OPIS’ closing range at the end of the day would be 221.50 – 224.00cts/gal – the midpoint for the day would be 222.75cts/gal. On this day, the weighted average would be 223.05cts/gal, which is calculated by giving added weight to the larger volume deals: 2x to the -2.25cts/gal and the -1.5cts/gal deals, and by factoring in the number of actual deals into the average. EXAMPLE: the -1ct/gal deal gets entered in four times. NOTE: for the weighted average, the Gulf Coast minimum deal is 25,000 bbl – those deals are counted once. 50,000 bbl deals are counted twice, and anything between 25,000 and 50,000, or in excess of 50,000 would be calculated at an appropriate percentage of a single piece. All gasoline grades follow seasonal environmental requirements for RVP. When actively trading, OPIS reports will track ranges for multiple RVPs, for example during transitional periods or in the summer in the Gulf Coast when 9.0-lb. and 7.8-lb. psi specs are seasonal. OPIS Spot Ticker Differentials are applied to the NYMEX, as it ticks, as an indicator of where the prompt market is valued. Though our full-day trading differentials are applied to the settled NYMEX, the Spot Ticker provides a market view into the numbers we are tracking as the futures market moves. Deals we confirm are posted throughout the day the Deal Log to give the market predictability as to where editors will call the full-day differential ranges and weighted averages. OPIS editors discover deals throughout the day, but some may not be reported to us right after they are done. We make every attempt to list deals in the Deal Log as soon as we discover and confirm them. In an effort to meet our deadlines, some late-received deals may be applied to our ranges and weighted averages once they are confirmed but may not be logged into the deal log. The OPIS Spot Ticker also offers customers overnight implied spot price discovery by linking final-day cash basis trading differentials to the Globex overnight NYMEX ticks. These implied numbers are for directional purposes only to give subscribers an idea of what direction prices are moving after hours. They are not included as a part of any OPIS daily spot range of prices. Time Stamp (all times are ET)
Price Discovery OPIS tracks a prompt market for southern grade products moving on the Colonial Pipeline, origin Pasadena, Texas, and waterborne FOB Gulf Coast. Colonial Pipeline Texas Origin exclusive trades are discarded from our full-day ranges. Pipeline shipments are scheduled according to cycles. Colonial Pipeline dictates those schedules, and hence, is ultimately the decision maker as to when cycles pump throughout the year. There are 72 cycles each year, lasting approximately five days. Colonial determines the duration of each cycle, which may be shortened, extended or eliminated. Schedules cannot be announced in advance by OPIS because the pipeline updates its calendar throughout the year. Prompt waterborne assessments run at comparable timing with prompt pipeline ranges. Cycles differ among different products at any given time. For example, Colonial unleaded regular may be on different cycle timing than Colonial diesel. OPIS follows three consecutive cycles, starting with the current cycle as “prompt-timing” and continuing with the next two out. In addition, OPIS Gulf Coast coverage tracks a ratable-timing range. Ratable numbers are an average of a full month of cycles. Because this range tracks a full month, during the first cycle of each month, the ratable range will reflect the same month. When the second cycle of the month becomes prompt, the ratable timing switches to the next month. It should be recognized that forward numbers often do not have the same detail of discovery and liquidity as prompt cycles. OPIS concurrently rolls all specialty grades that typically trade as "regrades" to basis products like conventional unleaded regular, so that timing references are consistent. Specifications Pipeline Gasoline
**All gasoline grades follow seasonal environmental requirements for RVP. During the summer months, OPIS shows the 7.8 lbs. RVP supplemental conventional unleaded alongside the 9.0 lbs. RVP seasonal spec. Winter RVP is 13.5 lbs. Pipeline Distillates
Waterborne Gasoline
**As with pipeline specs, all gasoline grades follow seasonal environmental requirements. During the summer months, OPIS shows the 7.8 lbs. RVP supplemental conventional unleaded alongside the 9.0 lbs. RVP seasonal spec. Waterborne Distillates
Blendstocks
Price Discovery New York Harbor The forward range is based on "any-month timing" for barrels that can be lifted in the same calendar or forward calendar month beyond prompt timing. The ratable range is based on traded values that reflect an average of a full month where a buyer takes delivery throughout the month. Cargoes in the New York Harbor typically trade as the “front half” or the “back half” of the month, which are later narrowed down to a 5-day delivery period. OPIS will accept barrels delivering in the “front half” of the month for inclusion in the prompt index, and barrels delivering in the “back half” of the month for inclusion in the forward index. OPIS cargo ranges reflect inside-duty basis. Specifications Gasoline
*All gasoline grades follow seasonal environmental requirements, with RVP from 9.0 lbs. to 15.0 lbs. **Reformulated unleaded: 87, 89, 93 octane. RFG blended with ethanol is not a fungible spot product. Each day OPIS creates an "implied" value for this product by taking 90% of the unleaded gasoline price and 10% of the price of spot ethanol. Distillates
Buckeye Pipeline Specifications (All conform to Colonial Pipeline Specs) Gasoline
*All gasoline grades follow seasonal environmental requirements. Distillates
Laurel Pipeline Specifications (All conform to Colonial Pipeline Specs) Gasoline
*Gasoline grades follow seasonal environmental requirements. Distillates
Boston Harbor Cargoes in the Boston Harbor typically trade as the “front half” or the “back half” of the month, which are later narrowed down to a 5-day delivery period. Specifications (All conform to Colonial Pipeline Specs) Gasoline
Distillates
Residual Fuel Price Discovery OPIS tracks the Group 3 market following deals for prompt delivery, typically same-day and next-day deals, on the Magellan Pipeline. In addition, OPIS tracks a forward range based on "any-month timing" for barrels that can be lifted in the same calendar month beyond prompt timing, typically the last five days of a month. In the last few days of the month, OPIS reserves the right to roll coverage forward to the next, more liquid month. OPIS tracks the Chicago market following generic pipeline deals, due to the fact that several lines feed this region. There are three cycles each month which advance on the 5th, 15th, and 25th. OPIS follows four consecutive cycles, starting with the current cycle as “prompt-timing” and continuing with the next three out. The last cycle in each month (“Cycle 3”) is designated as “any-timing” except when Cycle 3 is the prompt cycle. Then, the next calendar month’s Cycle 3 will be designated as “any-timing.” OPIS tracks the Wolverine Pipe Line market following deals for prompt cycle delivery refined products, shipping specifically on the Wolverine Pipe Line system. There are three cycles each month (January Cycle 1 through December cycle 3) that advance on the 5th, 15th, and 25th. Group 3 Specifications Gasoline
**All gasoline grades follow seasonal environmental requirements. Distillates
Chicago Specifications Gasoline
**All gasoline grades follow seasonal environmental requirements. Distillates
Wolverine Pipe Line Specifications Gasoline
**All gasoline grades follow seasonal environmental requirements. Distillates
Price Discovery OPIS does publish "prompt" ranges, which are trades that reflect "any month / buyers option" transactions. "Buyers option" gives the buyer the choice of taking delivery in any of the four cycles in throughout the month. In Los Angeles, OPIS identifies the prompt Kinder Morgan cycle for timing clarity but ranges are buyer option/any month lifting. Low carbon fuel standard obligations are passed on to the buyer with each spot sale. Some commonly-traded products in Los Angeles have pumping options attached to them. For example, most CARB diesel trades have a GATX storage facility option, while most jet fuel trades include a pump-over option to Los Angeles International Airport (LAX). OPIS works with the Kinder Morgan Pipeline to determine the timing of the various cycles throughout the month. Each month has four pumping cycles. The timing of the cycles is fluid from month-to-month, particularly the 4th cycle which marks the transition from one month to the next. Typically, on the West Line, diesel fuel will roll some time between the 16th and 20th of the month, while gasoline typically rolls between the 21st and 23rd of the month. For jet fuel, due to the LAX pumping option, the month typically rolls eight days before the end of the month. In cases where it is close to the end of the month’s trading cycle, OPIS reserves the right to roll coverage forward to the more liquid month. The OPIS West Coast report also offers physical and paper forward-price discovery in Los Angeles for CARBOB, CARB diesel and jet fuel. Forward physical discovery for CARBOB and jet fuel extend two months beyond the prompt market. For example, if June is the prompt month, the forward months for CARBOB and jet fuel will be July and August. For CARB diesel, OPIS provides one month of forward physical price discovery. For the paper market, OPIS provides two months, as well as the upcoming quarter, for CARBOB and jet fuel. For example if June is the prompt month, pricing for July, August and the 3rd quarter will be provided. For CARB diesel, OPIS provides one month of forward paper price discovery. Forward physical markets are shown as both a differential and on a fixed-price basis. The paper markets are shown as a differential only. U.S. West Coast Specifications Gasoline
Distillates
ANS Crude Oil U.S. Gulf Coast Biodiesel: Soy methyl ester (SME) B100, ASTM specifications, not including any tax credits for blending, FOB Houston rail volumes, typically 3 to 15 days from published date. Truck and in-tank sales will also be considered and factored for assessment purposes. Deals must generally include current calendar-year RINs transfer that correspond to the product delivery date. U.S. Atlantic Coast U.S. Midwest Ethanol (FOB Rail): Denatured fuel-grade ethanol FOB railcar shipments, typically five to thirty 29,000 gallon railcar loads shipping prompt up to five days from publication date with Nebraska locations for either or an average of both the Burlington Northern and Union Pacific rail lines, Renewable Identification Numbers (RINs) included for the current calendar year. Deliveries in the first quarter of a given year may include RINs from the previous calendar year. Ethanol (Rule 11): Denatured fuel-grade ethanol FOB railcar shipments, typically five to thirty 29,000 gallon railcar loads shipping prompt up to five days from publication date covered under AAR Rule 11 and taking place in and/or around Chicago, Renewable Identification Numbers (RINs) included that are for the current calendar year. Deliveries in the first quarter of a given year may include RINs from the previous calendar year. Biodiesel: Soy methyl ester (SME) B100, ASTM specification, in rail volume not including any tax credits for blending, FOB Argo terminal, 3-15 days from the published date. Deals must generally include current calendar-year RINs transfer that correspond to the product delivery date. U.S. West Coast Dallas Tampa Brazil Natural Gasoline (denaturant): National Renewable Fuel Feedstock/Co-Product Prices: Ethanol RIN Credits: This is the price assessment range for Renewable Identification Numbers attached to Renewable Biofuel as defined under the U.S. EPA’s Renewable Fuels Standard. Trades are generally for volumes of 1 million to 5 million gallons. RINs are generated by production of ethanol or other specified renewable fuels and traded daily for delivery anywhere in the U.S. Smaller or larger volume RIN trades as well as confirmed bids and offers may also be used in factoring the daily RIN price assessment. Ethanol RIN credit values are shown for the current and previous year of trading. Biodiesel RIN Credits: This is the price assessment range for Renewable Identification Numbers attached to Biomass-based Diesel as defined under the U.S. EPA’s Renewable Fuels Standard. RINs are generated by production of biomass-based biodiesel and traded daily for delivery anywhere in the U.S. Smaller or larger volume RIN trades as well as confirmed bids and offers may also be used in factoring the daily RIN price assessment. Biodiesel RIN credit values are shown for the current year of trading and the previous year, when available. Cellulosic Ethanol RIN Credits: This is a largely notional market price assessment range for Renewable Identification Numbers attached to Cellulosic Biofuel as defined under the U.S. EPA's Renewable Fuels Standard for volumes in the current year. Advance Biofuel Credits: This is a largely notional market price assessment range for Renewable Identification Numbers attached to Advanced Biofuel as defined under the U.S. EPA’s Renewable Fuels Standard for volumes in the current year. Note: Because of the sometimes thin nature of feedstocks trading, OPIS ranges for various products may sometimes encompass a relatively wide range of specifications. Editors are instructed to exclude bbls which are deemed "off spec" from particular price ranges, but sometimes we are not privy to a long list of specifications for individual cargo and barge loads. While every effort is made to include completed transactions within price range assessments, because of illiquidity, the assessments are sometimes subjective and based on a reasonable judgment as to where buyers and sellers would meet on common ground. What follows is an approximation of "ballpark" specifications for feedstocks covered in daily OPIS Overnight publication. Specifications Vacuum Gasoil Medium sulfur VGO would typically reflect 0.7-1.4% sulfur max. material; API Gravity, 22 min/30 max.; 110 F. max Pour; CCR, 0.5% max. Metals (ppm): Vanadium 1.5% max., Sodium 2.0 max., Iron 20 max., Copper 1.0 max, Nickel 1.0 max.; Aniline, 170 F. min.; Flash Point, 150 F. min.; Nitrogen (WT%), 1,500 max.; Distillation, 425 F. IBP min., 1,100 F. FBP max. High sulfur VGO is typically 1.5% sulfur or higher; API Gravity, 22 min./30 max.; 110 F. max. Pour; CCR, 0.5% max.; Metals (ppm): Vanadium 1.5 max., Sodium 2.0 max., Iron 2.0 max., Copper 1.0 max., Nickel 1.0 max.; Aniline, 160 F. min.; Flash Point, 150 F. Min., Nitrogen (WT%), 1,500 max.; Distillation, 425 F. IBP min., 1,100 F. FBP max. While VGO volumes transacted in the USGC spot market are not expected to exactly match the VGO specifications listed above, the above specifications serve as a benchmark for making spot assessments. VGO with materially above-average qualities (relative to the above specifications) would be expected to command a stronger price, and VGO with materially sub-par specifications would be expected to be discounted for quality. Depending on the extent of the quality discrepancy from the specifications listed above, OPIS may decide to reflect VGO deals somewhere within price ranges (near one end of the range rather than the mean), or OPIS may decide that the qualities of the VGO in question are too far removed from the above specifications to be considered representative of spot VGO values. VGO cargo price assessments reflect minimum 200,000 bbl parcels, delivered ex-duty basis to Gulf Coast ports. VGO barge price assessments typically represent domestic transactions for barges of 40,000 bbl or more on a delivered Houston basis, although smaller volumes (minimum 20,000 bbl) and volumes for delivery to other Gulf Coast locations will be considered as well. Timing on VGO cargoes: VGO cargoes typically trade one to two weeks before the cargoes land in the U.S. Gulf Coast. If a trade involves a cargo landing sooner than one week out, OPIS will attempt to determine if the material was discounted for prompt delivery and will consider the transaction level in that context. Some cargo trades involve material arriving more than two weeks out, and OPIS will consider such cargoes in its forward pricing assessments. Timing on VGO barges: VGO barge trades typically involve delivery within five days. If a barge trade involves delivery within two days, OPIS will attempt to determine if the material received a discount or a premium for prompt delivery and will consider the transaction level in that context. OPIS also will consider barge transactions for delivery more than five days out for purposes of general price discovery. Naphtha Paraffinic Naphtha Straight Run Residual Fuel High sulfur straight run values at the Gulf Coast typically reflect delivered Gulf Coast values for M-100, or E-4 material, but may often include high sulfur straight run from domestic sources and various material from offshore sources such as the Mediterranean. Light Cycle Oil West Coast Intermediate Feedstocks -- Vacuum Gasoil and Cycle Oil West Coast VGO values tend to be discussed in the market as differentials to the Los Angeles 70/30 split, and absolute values and differentials to crude are usually derived from VGO differentials to the split. Price ranges for low sulfur VGO reflect 0.0-0.3% sulfur material. Other typical specs: API gravity 19-25; CCR 0.5% max; all Metals less than 1 ppm; Sodium less than 1 ppm; Aniline typically 165-185 F.; Nitrogen (WT%) ranges 1,000-1,500 ppm. High sulfur VGO can range between 0.3-1.5% sulfur material, but the most typical sulfur spec would range from 1.0-1.5%. Other "typical" specs would include: API gravity 19-25; CCR 0.5% max; all Metals less than 1 ppm; Sodium less than 1 ppm; Aniline typically 150-175 F.; Nitrogen (WT%) less than 3,000 ppm. Cycle Oil material has a maximum sulfur content of 0.5%, with a typical Viscosity of 2.5-3.5%. Lower viscosity material is generally discounted. Gravity is usually 13-19. OPIS will consider deals involving VGO or cycle oil with non-typical specs. However, in such cases, OPIS also will take into consideration whether the material garnered a premium for above-average specs or a discount for sub-standard specs, and spot assessments will be made accordingly. OPIS will consider for assessment purposes spot transactions involving delivery or loading in the current month or in the immediate forward month. While price assessments reflect delivered values, deals transacted on an fob basis also can serve as market indicators, with a delivered equivalent value extrapolated from freight costs.
Asia Naphtha For naphtha we take an average forward value of the 2nd and 3rd cycle to calculate C+F Japan quotes to serve as the benchmark. The trades are based on forward paper deals and bids/offers with a parcel size of 25,000 tonnes. We assign 50 percent for the mid-day naphtha papers and 50 percent for the numbers at the close to calculate OPIS final signature values as well as close values at 4:30 pm Singapore Time. For FOB Arab Gulf naphtha assessments, we take the 1st cycle of the OPIS final signature value and deduct freight differentials for Arab Gulf-Singapore cargoes. FOB Singapore quotes are calculated as follows: (1st cycle of OPIS final signature/9) minus freight minus $0.05/bbl. Delivery (time is ET)
Price Discovery For North American markets, editors confirm and record deals done for NGLs between 9am and 5pm Eastern time (8am-4pm Central time) on a fixed price basis or in a relationship to another product or location or timing (example: E-P mix at a differential to purity ethane, TET propane at a differential to non-TET propane, prompt a penny over any current month). Editors respect the wishes of sources to remain anonymous in their activities in the market and any information we receive regarding parties in deals will be kept confidential. OPIS tracks any current month, prompt, and out month trading for NGLs. OPIS NGL prices labeled as "any current month" represent transactions for product that buyer and seller agree will be delivered at any time during the current calendar month. OPIS NGL prices labeled as "prompt current month" represent transactions for product that buyer and seller agree will be delivered within the next 48 hours. OPIS NGL prices labeled as "out month" represent transactions for product that buyer and seller agree will be delivered any time in the next calendar month. Data Integrity Ranges represent where the bulk of product is moving and do not include deals struck under extraordinary circumstances and far outside the range of other deals reported on a given day, or far above or below confirmed seller or buyer levels, or under certain volumes, generally 10,000 bbl at Mont Belvieu and 2,500 bbl in the Midwest markets, though deals done in these volumes are not automatically included by virtue of the volume, and deals done in smaller volumes may at times be included at the discretion of the editor. Ranges reflect actual transacted deals, but in the case of confirmed trading followed by a shift in the market without a done deal, editors will consider subsequent confirmed and legitimate bid-asks in determining the overall range, taking into account the input of the trading community, material shifts in the market at large, and the relationship the illiquid product may have with more actively-traded products. Editors have the ability to review and reflect transactions reached on electronic platforms, such as HostEnergy and ICE, within published ranges, but posted "bid/asked" numbers or even confirmed deals on such networks are viewed subjectively by OPIS staff. It is up to individual OPIS editors to determine whether prices quoted on electronic platforms fall within the reasonable realm of where business is being done -- OPIS will not include a price within its daily ranges simply because it appeared on an electronic platform. Finally, a note about errors and disputes. We recognize that ascertaining a spot product range is highly subjective, and realize that there will be parties that dispute our "call." Ranges are only changed in the case of clerical errors such as typos or transpositional mistakes. We never alter ranges simply because of oil firm complaints. Consideration of Calendar and Product-Spread Transactions In the case of a three-party spread - one in which firm A completes a calendar spread by selling to Firm B and buying from Firm C in different months - editors may consider the prices as well as the monthly differential when computing the day's ranges. Editors may consider both the prices and differentials achieved in a product spread (such as ethane for EP mix) or geographical spread (such as Conway propane for Mt. Belvieu Non-TET propane). Specifications In Mont Belvieu markets, TET prices apply to product traded in the original TET facility currently owned by the Energy Transfer Partners LP and Regency Energy Partners LP joint venture. Non-TET prices only apply to product traded in the Mont Belvieu Caverns facility that is a subsidiary of Enterprise Products Partners, LP. Other Non-TET prices apply to product traded in Targa Resources storage. Unless otherwise noted all prices refer to product traded on an in-well basis. Accepted industry standards:
Mixed and field grade products vary depending on market conditions, the gas stream or crude slate from which they are obtained, and no specs are available as these are not deemed fungible and are tested on a per batch basis. Delivery (all times are ET)
The OPIS daily end-of-day NGL Forwards Report provides a snap shot glimpse of monthly and quarterly forward assessments. The values shown in the report include low and high assessments and an overall OPIS average assessment for Mont Belvieu TET (LDH) propane, non-TET normal butane, natural gasoline, purity ethane, and Conway propane with ranges representing market projections as well as completed transactions. At times, liquidity is low in gas liquids forward markets and price reporting can be subjective. Therefore, editors talk to a cross-section of market participants, and any information editors receive pertaining to forward transactions is kept strictly confidential. OPIS editors have the discretion to exclude values that represent extraordinary circumstances or are far outside the range of other values reported on a given day. Deals generally represent volumes of 10,000 bbl. or greater at Mont Belvieu and 2,500 bbl or greater at Conway, though smaller volumes may be considered at an editor's discretion. Editors have the ability to reflect transactions reached on electronic platforms, but will not include a price in daily ranges simply because it appeared on an electronic platform. Ranges are only changed in the case of clerical mistakes and typographical errors. The spot price at today's settlement is a confirmation of bids, asks and/or transactions at the time of the NYMEX close. Note: quarterly values reflect three months of prices, even if all three are not currently displayed in the above report. OPIS Asia Distillates Spot Pricing OPIS covers various refined oil products as well as accurate and up-to-date price assessments based on CFR and FOB benchmarks that include those out of Singapore, Japan, South Korea and the Middle East which are summarized in our daily market reports. OPIS uses an average of daily forward paper/swaps value as a basis of our Asian daily assessments. We assign 50 percent for the mid-day swaps and papers and 50 percent for the numbers at the close to calculate OPIS final signature values as well as close values for 4:30 pm Singapore Time. The assessments generally reflect pricing of products loading 15 to 30 days from the date of publication. In other words, a report for March 1 will reflect forward prices from March 16-31. In our assessments, we use a variety of inputs which include outright, floating as well as a combination of both in terms of daily bids, offers and strike prices in the respective oil product market on both the physical and swaps trading. We calculate the mid-value of 15-30 days forward trading window by using the weighted average calculation that use the curve of 1st and 2nd cycle of swaps value. Then we add a discount or premium to calculate FOB Singapore quotes. For discount/premium assessments for FOB Singapore quotes, we take transactions with a size of 50,000 barrels for gasoline, 100,000 barrels for jet fuel, 150,000 barrels of gasoil, and 25,000 tonnes of fuel oil. FOB AG jet fuel and gas oil assessments are a simple freight netback from FOB Singapore quotes. The calculations for FOB Korea and FOB Taiwan are as follows: (FOB Singapore quotes minus FOB Singapore discount/premium) + discount/premium for each market. Editors confirm and record deals done with a size of 30,000-60,000 tonnes for FOB Korea and FOB Taiwan discount/premium assessments. If FOB Singapore jet fuel quote is $124.56/bbl with a premium of 85-cents, and if the freight rate for FOB Arab Gulf-Singapore LR 1 is $2.58/bbl, the calculation for FOB AG LR-1 is following: 124.56-2.58=$121.98/bbl If FOB Korea premium is $1.00/bbl for the same day, the calculation for FOB Korea is following: (124.56-0.85)+1.00=$124.71/bbl. Delivery (times are ET)
The assessments reflect pricing of products for loading 45 to 90 days from the date of publication based on three half-month cycles. In other words, a report for March 1 will reflect reflection of forward prices for H2 Apr (1st cycle), H1 May, (2nd cycle), and H2 May (3rd cycle).
OPIS Europe Distillates Spot Pricing Market coverage Products and specs Pricing basis Timing Size and location Price discovery Forward curve Product cracks and rolling Brent Carbon and clean prices Data integrity Delivery (times are ET)
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