Part 1: Futures & Spot Markets Getting to Know the Futures Market Before you can understand spot and rack prices, you need to understand the first piece in the downstream fuel puzzle: The New York Mercantile Exchange. NYMEX Paper market, influenced by big-scale regional and international factors. The industry commonly refers to this as the NYMEX or the “Merc.” Sometimes it is called “the futures market” or “the print.” It’s a mostly electronic platform exchange, on which buyers and sellers can trade various fuel commodities – on paper – any time from a month from now to 18 months in the future. That’s why it’s called a “futures” market. They call it a “paper” market because few, if any, physical barrels ever change hands. Trade volume is made up of contracts that transact among players. From here on out, to reduce any further confusion, we’ll refer to it as the NYMEX. The NYMEX is possibly the most influential factor in the upward/downward movement of wholesale rack markets. Oil futures affect spot markets, then rack markets, then ultimately retail markets. © OPIS by IHS Markit The first energy contract was launched in 1978. Since then, NYMEX has launched contracts for: • Crude oil (CL) • Natural gas (NG) • Ultra-low-sulfur diesel (HO) • Reformulated blendstock for oxygenate blending, RBOB (RB, a blendstock that takes the place of a gasoline contract) These abbreviations are what you’ll see on the trading screen, so add them to your alphabet soup full of acronyms to memorize. Fuel Buying 101, Part 1: Futures and Spot Markets | Oil Price Information Service (OPIS) © 2020, all rights reserved 4