A | B |
C |
D |
E-F |
G-J |
L |
M-O |
P |
R |
S |
T-Z
Back Months
Contract months that are further out in time are
collectively referred to as back months. See Front
Months for comparison.
Backwardation
Market situation in which futures prices are lower
in each succeeding delivery month. Also known as an
inverted market. The opposite of Contango.
Banker's Acceptance
A draft or bill of exchange accepted by a bank;
payment is guaranteed by the accepting institution.
Barge
A vessel, either motorized or towed, used to carry
products in navigable waterways. Inland river barges that
carry oil products generally hold 25,000 barrels. Oceangoing
barges range in size up to 120,000 barrels.
Barrel
A unit of volume measure used for petroleum and
refined products. 1 barrel = 42 U.S. gallons.
Baseload Capacity
Electric generating equipment normally operated
to serve loads on an around-the-clock basis.
Basis
The differential that exists at any time between the
cash, or spot, price of a given commodity and the price
of the nearest futures contract for the same or a related
commodity. Basis may reflect different time periods,
product forms, qualities, or locations. Cash minus futures
equals basis.
Basis Risk
The uncertainty as to whether the cash-futures
spread will widen or narrow between the time a hedge
position is implemented and liquidated.
Batch
A measured amount in which crude oil and refined
product shipments are sent through a pipeline.
Batching Sequence
The order in which shipments are sent through a
pipeline.
B/D
Barrels per Day. Usually used to quantify a
refiner’s output capacity or an oilfield’s rate of flow.
Bear
One who anticipates a decline in price or volatility.
Opposite of a bull.
Bear Market
Market in which prices are in a declining trend.
Bear Spread
The simultaneous purchase and sale of two
futures contracts in the same or related commodities with
the intention of profiting from a decline in prices but, at
the same time, limiting the potential loss if this expectation
is wrong. This can usually be accomplished by selling
a nearby delivery and buying a deferred delivery.
Bid
A motion to buy a futures or options contract at a
specified price. Opposite of offer.
Black-Scholes Model
An options pricing formula initially derived by
Fisher Black and Myron Scholes for securities options
and later refined by Mr. Black for options on futures.
Book Transfer
Transfer of title without actually delivering the
product.
Bottom Sediment and Water (BS&W)
Often found in crude oil and residual fuel.
Brand
Insignia identifying the producer of a specific
commodity.
Break
A rapid and sharp price decline.
Breakeven Point
The underlying futures price at which a given
options strategy is neither profitable nor unprofitable. For
call options, it is the strike price plus the premium. For
put options, it is the strike price minus the premium.
Broker
1) An individual who is paid a fee or commission
for acting as an agent in making contracts, sales, or purchases.
2) An
account executive, registered commodity representative,
or customers’ man who deals with customers and their
orders in commission house offices. See also Futures
Commission Merchant, Introducing Broker.
Bulge
A rapid advance in futures prices.
Bull
One who anticipates an increase in price or
volatility. Opposite of a bear.
Bull Market
Market in which prices are in an upward trend.
Bull Spread
The simultaneous purchase and sale of two
futures contracts in the same or related commodities with
the intention of profiting from a rise in prices but, at the
same time, limiting the potential loss if this expectation is
wrong. This can be accomplished by buying the nearby
delivery and selling the deferred.
Bunker C Fuel Oil (Or
Bunkering Fuel)
Fuel used for ships. Generally refers to a No. 6
grade of residual fuel oil with an API gravity about 10.5
degrees.
Buyers' Market
A condition of the market in which there is an
abundance of goods available and hence buyers can
afford to be selective and may be able to buy at less than
the price that previously prevailed. See sellers’ market.
Buying Hedge
Also called a long hedge. Buying futures contracts
to protect against possible increased costs of commodities
that will be needed in the future.
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