Oil Market Glossary

A–C

API gravity: A measure of crude oil density set by the American Petroleum Institute. Above about 31° is considered light, below about 22° heavy. Lighter crude yields more high-value fuels.

API weekly report: The American Petroleum Institute's estimate of US inventories, released on Tuesdays at 4:30 p.m. ET, the day before the EIA's official data.

Arbitrage: Buying crude in one market and selling in another to profit from a price difference larger than transport costs. Arbitrage keeps regional benchmarks linked.

Backwardation: A futures curve where near-month prices are above later months. It signals a tight market and falling inventories.

Barrel (bbl): 42 US gallons, or 158.987 litres. The standard unit for crude oil prices. See oil price per barrel.

b/d (barrels per day): The standard unit for production, consumption and flow rates, often written mb/d (thousand) or mmb/d (million).

Benchmark (marker crude): A reference crude, such as Brent, WTI or Dubai, against which other grades are priced at a differential.

Brent: The international benchmark based on North Sea crude grades, traded as ICE Brent futures. See Brent crude oil price.

Calendar spread: The price difference between two delivery months of the same contract, for example December minus January.

Contango: A futures curve where later months are priced above near months. It signals oversupply and pays traders to store oil.

COT report: The CFTC's weekly Commitments of Traders report, which shows positions held by producers, swap dealers and money managers in US futures.

Crack spread: The difference between the price of refined products (gasoline, diesel) and crude oil. It is a proxy for refining margins. The "3-2-1 crack" assumes 3 barrels of crude yield 2 of gasoline and 1 of distillate.

Cushing: The town in Oklahoma that is the delivery point for NYMEX WTI futures and a major storage and pipeline hub.

D–H

Dated Brent: The Platts-assessed price of physical North Sea cargoes loading 10 days to one month ahead. It is the spot price of the Brent complex.

Differential: The premium or discount at which a crude grade trades relative to a benchmark.

Distillates: Middle-of-the-barrel products, mainly diesel, heating oil and jet fuel.

Downstream: Refining, distribution and marketing of oil products.

Dubai/Oman: The benchmark for Middle East medium sour crude sold to Asia.

EFP (exchange of futures for physical): A transaction swapping a futures position for a physical position. It links ICE Brent futures to physical cargoes.

EIA: The U.S. Energy Information Administration. It publishes weekly inventory data, the Short-Term Energy Outlook and long-run price series.

Expiry (last trading day): The final day a futures contract trades. For Brent it is the last business day of the second month before delivery. For WTI it is about the 20th of the month before delivery.

Floating storage: Crude held on tankers at sea. It becomes profitable in deep contango.

Front month: The futures contract nearest to expiry. Headline oil prices quote it.

Heavy crude: Dense crude with low API gravity. It is cheaper and requires complex refining.

Hedging: Taking a futures or options position to offset price risk in a physical business.

I–O

ICE: Intercontinental Exchange, the operator of ICE Futures Europe, where Brent futures trade.

IEA: The International Energy Agency. It publishes the monthly Oil Market Report and coordinates emergency stock releases among member countries.

Light sweet crude: Crude with high API gravity and low sulfur, such as WTI and Brent. It is the most valuable type for refiners.

Midstream: Pipelines, storage terminals and shipping that move crude and products.

Murban: A light sour crude from Abu Dhabi with its own futures contract on ICE Futures Abu Dhabi.

NYMEX: The New York Mercantile Exchange, part of CME Group, where WTI futures (CL) trade.

OPEC: The Organization of the Petroleum Exporting Countries, founded in 1960 and based in Vienna. It has 11 members since the UAE left on 1 May 2026.

OPEC+: OPEC plus allied producers, including Russia, Kazakhstan, Oman and Mexico, coordinating output since late 2016.

Open interest: The number of futures contracts outstanding. Rising open interest during a trend suggests new money entering.

OSP (official selling price): The monthly price that national oil companies such as Saudi Aramco set for each grade and region, expressed as a differential to a benchmark.

R–Z

Refinery utilisation: Crude processed as a percentage of refinery capacity. It is reported weekly by the EIA for the US.

Rig count: Baker Hughes' weekly count of active drilling rigs, a leading indicator of US production.

Roll: Closing a position in the expiring futures month and opening one in a later month.

Sour crude: Crude with more than about 0.5% sulfur. It needs more processing and trades at a discount.

Spare capacity: Production that can be added within about 30–90 days and sustained. It is concentrated in Saudi Arabia, the UAE and Kuwait.

SPR (Strategic Petroleum Reserve): The US government's emergency crude stockpile in salt caverns on the Gulf Coast.

Spot price: The price for immediate or near-term physical delivery.

Upstream: Exploration and production (E&P) of crude oil and natural gas.

Urals: Russia's main export blend, a medium sour crude that has traded at a large discount since 2022 sanctions.

WCS (Western Canadian Select): A heavy sour Canadian crude benchmark priced at Hardisty, Alberta, usually at a discount to WTI.

WTI: West Texas Intermediate, the US light sweet crude benchmark delivered at Cushing. See WTI crude oil price.