Glossary

Arbitrage

Arbitrage is the practice of profiting from price differences for the same commodity across locations, time periods, or delivery formats, such as buying crude in one region and selling it elsewhere after transport costs. Read the article Wikipedia

Backwardation

Backwardation is a market structure where prompt prices for a commodity are higher than prices for later delivery, often signaling tight near-term supply relative to longer-term expectations. Read the article Wikipedia

Benchmark

A benchmark is a reference price against which physical cargoes and derivatives are valued, such as Brent for crude oil, WTI for US oil, and TTF for European gas. Read the article Wikipedia

Brent

Brent is the leading global crude oil benchmark, based on oil produced in the North Sea and used to price a large share of the world's physical crude exports and related derivatives. Read the article Wikipedia

Carbon credit

A carbon credit is a tradable permit representing one tonne of carbon dioxide equivalent that can be emitted or offset, used by companies to meet regulatory obligations or voluntary climate commitments. Read the article Wikipedia

Chartering

Chartering is the contracting of vessels to move commodities, including tankers for oil and LNG carriers, typically on voyage or time-charter terms, and is central to physical trading logistics. Read the article Wikipedia

Contango

Contango is a market structure where forward prices exceed prompt prices, encouraging storage of commodities when the price spread covers warehousing and financing costs. Read the article Wikipedia

Derivative

A derivative is a financial contract whose value derives from an underlying commodity price, including futures, swaps, and options, used for hedging, speculation, and price discovery. Read the article Wikipedia

EMIR

EMIR is the European Market Infrastructure Regulation, requiring reporting, clearing, and risk mitigation for derivatives trades, including those used by energy and commodity firms. Read the article Wikipedia

EU ETS

The EU ETS is the European Union Emissions Trading System, a cap-and-trade scheme covering power generation and heavy industry, where allowances are auctioned and traded as carbon prices. Read the article Wikipedia

FinfraG

FinfraG is Switzerland's Financial Market Infrastructure Act, regulating Swiss trading venues, trade repositories, and derivatives conduct rules, with specific provisions affecting commodity traders. Read the article Wikipedia

Forward contract

A forward contract is a bilateral agreement to buy or sell a commodity at a fixed price for future delivery, typically customized and traded over the counter rather than on exchanges. Read the article Wikipedia

Futures contract

A futures contract is a standardized exchange-traded agreement to buy or sell a commodity at a set price on a future date, cleared through a central counterparty with margin requirements. Read the article Wikipedia

Hedging

Hedging is the use of offsetting positions, usually derivatives, to reduce exposure to adverse price movements in physical commodity positions, trading margin risk for price certainty. Read the article Wikipedia

Henry Hub

Henry Hub is a natural gas pipeline interconnection in Louisiana serving as the pricing point for US natural gas futures and the reference for North American LNG export contracts. Read the article Wikipedia

Letter of credit

A letter of credit is a bank guarantee of payment in commodity transactions, issued against compliant shipping documents, protecting sellers against buyer default in cross-border trade. Read the article Wikipedia

LNG

LNG, or liquefied natural gas, is natural gas cooled to about minus 160 degrees Celsius for shipping by vessel, enabling gas trade between regions without pipelines. Read the article Wikipedia

Margin call

A margin call is a demand from a clearing house or broker for additional collateral when positions move against a trader, a key liquidity risk in exchange-traded commodity derivatives. Read the article Wikipedia

MiFID II

MiFID II is the EU Markets in Financial Instruments Directive, governing investment services and trading venues, with exemptions and thresholds that determine when commodity traders need authorization. Read the article Wikipedia

Netback

A netback is the realized value of a cargo at destination minus freight, taxes, and other costs, used to compare the profitability of selling into different markets. Read the article

Option

An option grants the right, without the obligation, to buy or sell a commodity at a set price before or at expiry, used to hedge while retaining upside price exposure. Read the article Wikipedia

Paper trading

Paper trading involves buying and selling financial instruments such as futures and swaps without handling physical cargo, used for speculation, hedging, and price risk transfer. Read the article

Physical trading

Physical trading is the buying, selling, transporting, and storing of actual commodities, where traders capture margins through logistics, timing, location, and quality transformations. Read the article

Price reporting agency

A price reporting agency, such as Platts or Argus, publishes benchmark price assessments based on transaction data and surveys, informing contract pricing across oil, gas, and LNG markets. Read the article Wikipedia

REMIT

REMIT is the EU Regulation on Wholesale Energy Market Integrity and Transparency, prohibiting market abuse and requiring transaction reporting for wholesale energy products. Read the article Wikipedia

Spark spread

The spark spread is the difference between the electricity price and the cost of the gas needed to generate it, a key margin indicator for gas-fired power trading. Read the article Wikipedia

Storage

Storage in commodity trading refers to holding physical inventories in tanks, warehouses, or underground facilities, enabling traders to capture seasonal and contango-driven price spreads. Read the article

Swap

A swap is an over-the-counter contract exchanging fixed for floating price payments on a commodity, widely used by producers and consumers to lock in price certainty. Read the article Wikipedia

Term structure

Term structure describes the pattern of commodity prices across delivery dates, from prompt to far-dated contracts, revealing market expectations about supply, demand, and storage economics. Read the article

Time charter

A time charter is a shipping contract hiring a vessel for a fixed period at a daily rate, giving traders flexibility to deploy tonnage across cargoes and routes. Read the article Wikipedia

Trade finance

Trade finance covers the instruments funding commodity flows, including letters of credit, borrowing bases, and inventory finance, bridging the gap between paying suppliers and receiving buyers. Read the article Wikipedia

Trader

A trader in energy and commodities buys and sells physical cargoes or derivatives, managing price, credit, and logistics risk, often within specialized books by product or region. Read the article Wikipedia

TTF

TTF, or Title Transfer Facility, is the Dutch virtual gas trading hub serving as Europe's leading natural gas benchmark, used for pricing LNG imports, storage, and gas derivatives. Read the article Wikipedia

WTI

WTI, or West Texas Intermediate, is the main US crude oil benchmark, a light sweet grade delivered at Cushing, Oklahoma, and the reference for NYMEX oil futures. Read the article Wikipedia

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