Our Gulf Coast refiner said they were selling spot for 15 cents under. Traders are busy. They don’t have time to say “15 cents under NYMEX RBOB.” But that’s what they mean. That minus 15cts is what you are negotiating against the NYMEX price. We also call this a “differential,” or a “diff.” Spot basis is the relationship between a commodity on the NYMEX and the corresponding commodity in the physical, bulk market. Sometimes it’s a plus, sometimes a minus. Occasionally it’s even “flat” to futures. The differentials go up, or down depending upon what’s happening in the U.S. and all over the world. So, count back 15 cents from your $1.65/gal circle on your number line and you get the spot price of mogas in the Gulf Coast: $1.50/gal. Every major U.S. refined products market adheres back in some way to a product on the NYMEX, with basis forming the glue between them. Distillates, like diesels and jet fuel, tie back to ULSD while finished gasoline and blendstocks tie back to RBOB. Pretty Easy, Right? Not always... Remember that NYMEX futures don’t just sit still. They react to various forces in the market, such as a labor strike in Venezuela. Those forces can swing that circled value on the number line up and down. But the relationship between futures and physical fluctuates, too. A refinery turnaround in the Los Angeles market can widen CARBOB premiums to the NYMEX and send local spot prices flying in excess of what NYMEX is doing. Fuel Buying 101, Part 1: Futures and Spot Markets | Oil Price Information Service (OPIS) © 2020, all rights reserved 10