Oil & Gas Market Glossary

3:2:1 Crack Spread

The classic proxy for US refining margin: the value of 2 barrels of gasoline plus 1 barrel of distillate, minus 3 barrels of crude, divided by 3 and expressed in $/bbl. Wider cracks mean stronger refining economics. See it live →

45Q Tax Credit

A US tax credit paid per ton of CO2 captured and stored, including CO2 injected to recover more oil. It is the main policy linking carbon capture to enhanced oil recovery. See it live →

Associated Gas

Natural gas that comes out of a well drilled for oil. Because operators drill for the oil, associated gas keeps growing even when gas prices are weak; the Permian Basin is the largest US example. See it live →

Backwardation

A forward curve where the front month is the most expensive. It signals tight prompt supply — buyers pay a premium for barrels now — and is generally read as bullish. See it live →

Baker Hughes Rig Count

A weekly Friday census of active drilling rigs — the standard leading indicator of future US oil and gas production. See it live →

Barrel (bbl)

The standard unit of oil volume: 42 US gallons, about 159 liters. Oil prices are quoted per barrel even though crude has not been shipped in wooden barrels for a century. See it live →

Barrel of Oil Equivalent (BOE)

A way to add oil and gas on one scale by converting gas to the energy of a barrel of oil. The industry convention is 6,000 cubic feet (6 Mcf) of natural gas per barrel; by actual energy content a barrel is closer to 5.6 Mcf. See it live →

Bcf, Bcf/d and bcm

Billion cubic feet (a volume of natural gas), the same per day, and billion cubic meters. One bcm equals about 35.3 Bcf. US gas production is quoted in Bcf/d, while world statistics use bcm per year. See it live →

Benchmark Crude

A widely traded reference grade against which other crudes are priced at a premium or discount. The big three are WTI (Americas), Brent (Europe/Africa) and Dubai/Oman (Asian imports of Middle Eastern crude). See it live →

Breakeven Price

The oil price at which a new well earns back its costs. Surveys of US shale producers put new-well breakevens at roughly $62 to $70 a barrel in 2025, well above the cost of simply keeping an existing well producing. See it live →

Brent Crude

The international benchmark for light, sweet crude, drawn from North Sea fields and traded as the ICE BZ contract. Roughly two-thirds of the world's internationally traded crude is priced off Brent. See it live →

Brent–WTI Spread

The price difference between the two major benchmarks. Brent usually trades a few dollars above WTI, reflecting transport costs from Cushing to tidewater and regional supply-demand differences. See it live →

Build and Draw

A "build" is a weekly rise in inventories and a "draw" is a fall. A larger-than-expected crude build is usually read as bearish and a draw as bullish, because it shows supply outrunning or lagging demand. See it live →

Chokepoint

A narrow waterway through which a large share of the world's oil moves, such as the Strait of Hormuz, the Strait of Malacca, the Suez Canal and the Bab el-Mandeb. Disruption there cannot easily be rerouted. See it live →

Condensate

A very light liquid that comes out of a gas well as a vapor and condenses at the surface. Lease condensate is counted with crude oil in most production statistics, which is why "crude including lease condensate" appears in EIA tables. See it live →

Contango

A forward curve where later months cost more than the front month. It signals comfortable prompt supply, and when the gap exceeds storage costs, traders can buy spot, store, and sell forward at a profit ("cash and carry"). See it live →

Contract Roll

Moving a position from an expiring futures contract into the next month. Quotes "roll" at expiry, which can create small price jumps unrelated to supply or demand, and funds that roll monthly bear the cost of contango. See it live →

Cushing, Oklahoma

The delivery point for WTI futures and the largest crude storage hub in the US ("the pipeline crossroads of the world"). Cushing stock levels directly influence the WTI price and curve shape. See it live →

Days of Import Cover

How many days a country's strategic reserve would replace its net oil imports — the standard measure of reserve adequacy; the IEA obligation is 90 days. See it live →

Decline Curve

The rate at which a well's output falls over time. A shale well typically loses more than half of its output within the first year, which is why drillers must keep drilling just to hold production flat. See it live →

Distillate

The middle of the barrel: diesel, heating oil and jet-kerosene. EIA "distillate stocks" are a key winter-demand and freight-economy indicator. See it live →

E10, E15 and E85

Gasoline blends containing 10%, up to 15% and up to 85% ethanol. Ethanol has about a third less energy per gallon than gasoline, so higher blends lower fuel economy. See it live →

EIA (Energy Information Administration)

The statistical agency of the US Department of Energy and the source of most US energy data on this site, from weekly inventories to the Short-Term Energy Outlook. See it live →

EIA Weekly Petroleum Status Report

The most market-moving weekly US dataset, released Wednesdays: crude and product inventories, refinery runs, production and trade flows. Larger-than-expected builds are bearish; draws are bullish. See it live →

Enhanced Oil Recovery (EOR)

Techniques that recover oil left after primary and secondary methods, usually by injecting CO2, steam or chemicals to change how the oil flows. CO2 injection is the most common form in the US. See it live →

Estimated Ultimate Recovery (EUR)

The total oil or gas a well is expected to produce over its life. EUR is the denominator in a well breakeven calculation: capital cost divided by EUR gives the capital cost per barrel. See it live →

Flaring

Burning off natural gas at a well because there is no pipeline or market to take it. Flaring is most common where oil drilling has outrun gas infrastructure, as in parts of the Bakken. See it live →

Floating Storage

Oil stored on tankers at sea. Traders use it when the futures curve is in contango: buy crude now, store it on a chartered tanker and sell it forward if the price spread covers the cost. See it live →

Force Majeure

A contract clause that excuses a party from delivering when events beyond its control, such as war, blockades or storms, prevent it. Producers and terminals declare it, as Libya's National Oil Corporation has done at export terminals. See it live →

Forward Curve / Term Structure

Prices for each future delivery month plotted in a line. Its shape — contango or backwardation — is one of the market's clearest signals of physical tightness. See it live →

FPSO (Floating Production, Storage and Offloading)

A ship-shaped floating factory that processes oil from subsea wells, stores it and transfers it to shuttle tankers. It is the standard deepwater production unit off Brazil, Guyana and West Africa. See it live →

Freeze-Off

A well shutting in because water in the produced fluid freezes inside valves and equipment during extreme cold. Winter Storm Uri in 2021 shut in an estimated 3.8 million barrels a day of US crude production at its peak. See it live →

Front-Month Contract

The futures contract closest to delivery — the price quoted as "the oil price" in headlines. As each contract expires, quotes roll to the next month, which can create small jumps unrelated to supply or demand. See it live →

Heating Degree Days (HDD)

A measure of how cold a period was: the number of degrees the day's average temperature fell below 65°F, summed over the period. More heating degree days mean more heating fuel demand. See it live →

Hedging

Using futures or other contracts to lock in a price and offset the risk of a price move. Airlines hedge fuel purchases and producers hedge future output. See it live →

Henry Hub

A pipeline interchange in Erath, Louisiana where major gas pipelines meet — the delivery point for NYMEX natural-gas futures and the reference price for most North American gas, quoted in $/MMBtu. See it live →

Horizontal Drilling

Drilling a well down and then sideways through a producing layer. Modern shale wells run horizontal sections (laterals) of 1.5 to 4.5 km or more, exposing far more rock to the well than a vertical hole. See it live →

Hydraulic Fracturing (Fracking)

Pumping water, sand and a small share of chemicals into a well at high pressure to crack tight rock so oil and gas can flow. Combined with horizontal drilling, it made US shale production possible. See it live →

IEA (International Energy Agency)

The Paris-based agency of energy-consuming countries. It coordinates emergency oil stock releases among members and publishes the monthly Oil Market Report. See it live →

Jet Fuel (Kerosene-Type)

The kerosene cut of the barrel used by aircraft. The EIA publishes a weekly Gulf Coast jet fuel spot price. See it live →

Light vs. Heavy Crude / API Gravity

Density, measured in degrees API — higher numbers are lighter. Light crude (API > 31°) yields more high-value products per barrel. WTI is about 40° API; Canadian oil-sands bitumen can be under 10°. See it live →

Liquefied Natural Gas (LNG)

Natural gas chilled to about −162 °C (−260 °F), which shrinks it to roughly 1/600th of its volume so it can be shipped by tanker where no pipeline exists, then turned back into gas at an import terminal. See it live →

Managed Money / COT Report

The CFTC's weekly Commitments of Traders report shows hedge-fund ("managed money") long and short positions in futures. Extreme net positioning often precedes reversals. See it live →

Mb/d and kb/d

Million barrels per day and thousand barrels per day, the standard units for oil production, consumption and trade. World oil demand is on the order of 100 Mb/d. See it live →

MMBtu

One million British thermal units, the standard unit for pricing US natural gas. One barrel of crude contains roughly 5.8 MMBtu of energy. See it live →

Murban

Abu Dhabi's flagship light crude, traded as its own futures contract on ICE Futures Abu Dhabi since 2021 and increasingly used as a benchmark for Asia-bound Gulf crude. See it live →

National Oil Company (NOC)

An oil company owned or controlled by a government, such as Saudi Aramco, Rosneft, ADNOC or Petrobras. National oil companies control roughly three-quarters of the world's reserves and over half of its production. See it live →

Natural Gas Liquids (NGLs)

Hydrocarbons such as ethane, propane and butane that are separated from natural gas at processing plants. They are used as petrochemical feedstock and heating fuel and are counted in "petroleum and other liquids" supply, but not in crude oil. See it live →

Natural Gas Storage (Working Gas)

Gas held in underground storage that can be withdrawn and sold, as opposed to the cushion gas that must stay to keep pressure. EIA reports Lower-48 working gas every Thursday against the five-year average. See it live →

Net Importer / Net Exporter

A country whose imports exceed its exports of a fuel is a net importer, and the reverse is a net exporter. The US is a net exporter of petroleum overall, yet it still imports large volumes of particular crude grades. See it live →

Octane Rating

A gasoline's resistance to knocking, shown as the number on the pump (87, 89, 93). Premium costs more because higher octane is more expensive to make, and it only helps engines designed for it. See it live →

Oil Sands

Deposits of bitumen, a thick, heavy oil mixed with sand, mined or heated underground to flow. Canada's oil sands account for about two-thirds of its crude output. See it live →

OPEC and OPEC+

The Organization of the Petroleum Exporting Countries (11 members led by Saudi Arabia) and the wider OPEC+ group including Russia and others, which coordinates production quotas to manage prices. See it live →

OPEC Reference Basket

An average price of a group of crude grades produced by OPEC members, published by OPEC as a reference for the oil market. It is one of the prices tracked among the global benchmarks. See it live →

Open Interest

The number of futures contracts that are still open (not yet closed or delivered). Rising open interest with a rising price suggests new money is entering the market. See it live →

PADD (Petroleum Administration for Defense District)

One of five US regions EIA uses to report petroleum statistics. PADD 3, the Gulf Coast, holds just over half of US refining capacity. See it live →

Peak Oil / Peak Demand

Peak oil is the idea that production will reach a maximum and decline; peak demand is the idea that consumption will plateau before supply runs short. The debate has shifted from the first to the second. See it live →

Petrodollar

The practice of pricing and settling oil in US dollars. It is a market convention, not a treaty or a currency, and it sits behind much of the dollar's role in global trade. See it live →

Pre-Salt

Oil reservoirs lying beneath a thick layer of salt, far offshore. Brazil's deepwater pre-salt fields, found in the mid-2000s, are among the world's largest recent discoveries. See it live →

Price Cap (Russian Oil)

A rule, in force since December 2022, that lets Western shipping, insurance and financial firms handle Russian seaborne crude only if it is sold at or below a set price. It aims to keep Russian oil flowing while limiting the revenue Russia earns per barrel. See it live →

Price Differential

The premium or discount of one crude grade to a benchmark. A cargo is typically priced as "Brent plus or minus X dollars", with the differential reflecting quality, location and local supply and demand. See it live →

Processing Gain

The extra volume that comes out of a refinery compared with the crude that went in. Refined products are less dense than crude, so 42 gallons of crude yields about 45 gallons of products. See it live →

Product Supplied

EIA's measure of US oil demand: what is delivered from refineries, terminals and pipelines to the market, used as a proxy for consumption. Weekly product supplied for gasoline, distillate and jet fuel is a key demand signal. See it live →

Production Quota

An output limit set for a member of a producer group such as OPEC or OPEC+. Quotas are voluntary agreements, and disputes over them have led members, including Angola and the UAE, to leave the group. See it live →

Proved Reserves

Oil or gas that geological and engineering data show can be recovered with reasonable certainty (typically at least 90% confidence) from known fields under current economic and operating conditions. Proved reserves change with prices and technology. See it live →

RBOB Gasoline

Reformulated Blendstock for Oxygenate Blending — the wholesale gasoline blendstock traded on NYMEX, quoted in $/gallon. Retail pump prices track RBOB plus ethanol, taxes and distribution. See it live →

Refinery Utilization

The share of a refinery system's distillation capacity that is actually running. EIA publishes the US figure weekly; rates in the low-to-mid 90s percent are considered very high, and a drop usually signals outages or maintenance. See it live →

Reid Vapor Pressure (RVP)

A measure of how easily gasoline evaporates. Summer gasoline is blended to a lower RVP to limit smog-forming vapors, which makes it more expensive to make than winter gasoline. See it live →

Reserves-to-Production (R/P) Ratio

Proved reserves divided by one year of production, giving the number of years reserves would last at the current rate. It is a snapshot, not a forecast: production rates, prices and technology all change, and new reserves are added over time. See it live →

Salt Cavern

An underground chamber created by dissolving a salt formation with water, used to store crude oil. The US Strategic Petroleum Reserve is held entirely in salt caverns at four Gulf Coast sites. See it live →

Settlement Price

The official daily closing price of a futures contract, set by the exchange. Daily closes and historical price tables use settlement prices. See it live →

Shadow Fleet

Tankers of unclear ownership, often old, that carry sanctioned oil while avoiding Western-flagged insurance and shipping services. Estimates put the fleet at several hundred vessels. See it live →

Shale Oil / Tight Oil

Crude produced from low-permeability rock that holds oil in place, requiring horizontal wells and fracking to produce at scale. It is the source of most US output growth since 2008. See it live →

Shut-In Production

Output that is deliberately stopped, for example when Gulf of Mexico platforms are evacuated before a hurricane or when wellheads freeze in winter. Shut-in volumes usually return within days to weeks. See it live →

Spare Capacity

Production capacity that could be brought online quickly and sustained. EIA defines it as capacity that can be reached within 30 days and held for at least 90 days. Most of the world's spare capacity sits in a few OPEC members, which makes it the market's buffer against supply losses. See it live →

Spot Price vs. Futures Price

The spot price is what a barrel costs for immediate delivery; a futures price is what traders agree to pay for delivery on a set future date. The headline "oil price" is the front-month futures price. See it live →

STEO (Short-Term Energy Outlook)

EIA's monthly forecast of energy prices, supply and demand through the next year or two. Its WTI and Brent price forecasts are widely quoted. See it live →

Strategic Petroleum Reserve (SPR)

A government-owned emergency crude stockpile. The US SPR, stored in Gulf Coast salt caverns, has the largest design capacity of any single government reserve (about 714 million barrels); IEA members that are net oil importers must hold emergency stocks equal to 90 days of net imports. See it live →

Supermajors

The largest publicly traded Western oil companies: ExxonMobil, Chevron, Shell, TotalEnergies and BP. They are large by market value but mid-sized by barrels produced compared with the big national oil companies. See it live →

Sweet vs. Sour Crude

Sulfur content. Sweet crude has under ~0.5% sulfur and is cheaper to refine into gasoline and diesel; sour crude (over ~1%) needs more processing and typically trades at a discount.

Tailpipe vs. Well-to-Wheel Emissions

Tailpipe emissions are the CO2 released when fuel is burned in a vehicle; well-to-wheel also counts producing, refining and delivering the fuel, which adds roughly 15 to 25% on top. See it live →

TTF and JKM

The two main global gas benchmarks outside North America: TTF, the Dutch Title Transfer Facility, prices gas in Europe, and JKM, the Japan Korea Marker, prices spot LNG delivered to Asia. Both are quoted in $/MMBtu or euros per MWh and usually trade well above Henry Hub. See it live →

ULSD (Ultra-Low-Sulfur Diesel)

Diesel with 15 parts per million sulfur or less, the standard road diesel in the US. The NYMEX "heating oil" futures contract is for ULSD, so it moves diesel and heating oil prices. See it live →

Upstream, Midstream, Downstream

The three stages of the oil business: upstream is exploration and production, midstream is transport and storage (pipelines, tankers, terminals), and downstream is refining and selling products. Integrated companies operate in all three. See it live →

VLCC (Very Large Crude Carrier)

The standard long-haul crude tanker, carrying about 2 million barrels. Smaller classes include Suezmax (about 1 million barrels) and Aframax (roughly 0.6 to 0.8 million barrels). See it live →

Volatility Index (OVX)

The CBOE Crude Oil Volatility Index, a measure of the market's expectation of oil price swings over the next 30 days, derived from options prices on the USO oil fund. Higher readings mean the market expects larger moves. See it live →

Western Canadian Select (WCS)

Canada's main heavy, sour crude benchmark, made from oil-sands bitumen blended with diluent. It trades at a discount to WTI, and the gap widens when pipelines out of Alberta fill up. See it live →

WTI (West Texas Intermediate)

The US benchmark for light, sweet crude oil, priced for delivery at Cushing, Oklahoma and traded as the NYMEX CL futures contract. Most North American crude is priced relative to WTI. See it live →

88 Terms, A–Z