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CVR Energy, Inc. Message Board

  • asstsecretary@bellsouth.net asstsecretary May 11, 2013 11:17 AM Flag

    A little help please on spreads

    Regarding the spread against Brent crude. I have difficulty seeing why he price of Brent (North Sea Crude) is relevant. If it is $8.00 higher it might be relevant if we wanted to ship North American crude or distillates to Europe. Certainly mid-east Asians, Africans and South Americans do ship crude to North America but I fail to see how one can make money shipping Brent to North America. I also cannot imagine why we would want to ship crude to Europe.

    Secondly, how is crack spread quotes. Are there market symbols for the different types, such as Chicagi 3-2-1?

    It is very nice to see CVRR making some moves up. I hope eventually to see a nice rally take hold and stay.

    Sentiment: Strong Buy

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    • I should add that most refineries get their crude from Brent priced crudes, so that sets the market. Those that get WTI priced crude, just get an immediete pricing advantagae and windfall profits. The crack spread is the price of refined products minus the price of crude. Typical spread is wuoted at 28 gallons of gasoline and 14 gallons of diesel minus 1 barrel of crude. (there are 42 gallons in a barrel).

    • it is relevant to refiners who have access to crude priced off of WTI. Because many gulf coast refineries that CVI and others compete against, get their crude from Brent type crudes. Like Gulf of mexico crude is priced as if it is Brent. So when the Brent spread is high, it means extra profits for CVI. Now that the brent spread has collapsed somewhat, it means less profits for CVI and other mid continent refiners. However they are still making a lot of money. I view CVI slights expensive relative to other refineriers currently such as WNR, HFC. But will likely remain expense since CVRR pays out a larger % of profits than other refiners.

 
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