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Fri, 10 September 2010

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M&C Energy Group Glossary
Find here terms and their explanations commonly used in Energy Industry, Finance and Trading Boards

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There are 495 entries in the glossary.
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Term	Definition
Account Executive	The agent of a commission house who serves customers/traders by entering their commodity futures and options orders, reporting trade executions, advising on trading strategies, etc.

Active Month	In the metals markets, the nearest base contract month that is not the current delivery month. The base months for each metals futures are defined by each individual contract.

Active Power	Also known as 'Real Power' or simply 'Power'. Active power is the rate of producing, transfer or using electrical energy. Measured in watts and often-expressed in kW or MW.

Actuals	Physical cash commodities as opposed to futures contracts.

Administrative Workstation	A NYMEX ACCESS workstation through which Exchange clearing members monitor all activity in accounts they carry and set limits on their customers' accounts through the Trade Limit Monitoring System.

ADP	Alternative Delivery Procedure. A provision of a futures contract that allows buyers and sellers to make and take delivery under terms or conditions that differ from those prescribed in the contract. An ADP may occur at any time during the delivery period, once long and short futures positions have been matched for the purpose of delivery.

AGA	American Gas Association. Major natural gas industry trade association, based in Alexandria, Virginia. AGA conducts technical research and helps create standards for equipment and products involved in every facet of the natural gas industry. It also compiles statistics which are considered industry standards.

All or None	An order which must be filled in its entirety or not at all.

American Option	An option contract that may be exercised at any time prior to expiration. This differs from a European Option which may only be exercised on the expiration date.

Ampere (Amp)	The unit that measures the rate of flow of an electrical current.

Annual Agreed Quantity (AAQ)	The annual volume of gas consumed, measured in Kilowatt hours (kWh).

API	American Petroleum Institute. The primary U.S. oil industry trade association, based in Washington, D.C. API conducts research and sets technical standards for industry equipment and products from wellhead to retail outlet. It also compiles statistics which are regarded as industry benchmarks.

API Gravity	Gravity (weight per unit volume) of oils as measured by the API scale whereby: API Gravity = 141.5 specific gravity at 60�F = -131.5

Apparent Power	The product of the voltage (volts) and the current amps. Comprises both active and reactive power. Measured in VA (volt-ampere), kVA (kilo-volt-ampere) or MVA (mega-volt-ampere).

Approved Carriers	Armored carriers approved by the Exchange for the transportation of gold, platinum, and palladium.

Arbitrage	The simultaneous purchase of one commodity against the sale of another in order to profit from fluctuations in the usual price relationships. Variations include the simultaneous purchase and sale of different delivery months of the same commodity; of the same delivery month, but different grades of the same commodity; and of different commodities.

Ask	A motion to sell. The same as offer.

Assay	To test a metal or an oil for purity or quality.

Assignment	The process by which the seller of an option is notified of a buyer's intention to exercise the rights associated with the option.

Associated Gas	Natural gas present in a crude oil reservoir, either separate from or in solution with the oil.

ASTM	American Society for Testing Materials. Grade and quality specifications for petroleum products and metals are determined by the ASTM in test methods.

At-the-Market	An order to buy or sell a futures contract at whatever price is obtainable when the order reaches the trading floor. Also called a market order.

At-the-Money	An option whose exercise, or strike, price is closest to the futures price.

Automatic Exercise	Following options expiration, an option which is in-the-money by $100 or more is exercised automatically by the clearinghouse, unless the holder of the option submits specific instructions to the contrary.

Availability Charge	The charge for the amount of power made available to the clients premises. It is related to the agreed supply capacity. The distribution company sets the rate and it is expressed in kVA. See also: Excess Availability Charges

Available Supply Capacity (ASC)	The agreed maximum supply capacity, measured in kVa, which a customer is allowed to take from the distribution system through their connection point. Customers pay a monthly charge for each unit of capacity. The maximum demand should not exceed the ASC.

Avoirdupois Unit	Customary U.S. weights. 1 troy ounce = 1.09 ounces avoirdupois.

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. Ocean-going 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.

Barrels per Day	Market situation in which futures prices are lower in each succeeding delivery month. Also known as an inverted market. The opposite of contango.

Base Load	The minimum amount of electricity being used during non-operational hours. Base load is the level below which electricity demand never drops. (i.e. A site with a high maximum demand of 750 kVa whose demand never drops below 250 kVa would have a base load of 250 kVa.)

Base Metal	Copper, aluminum, lead, nickel, and tin.

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.

Bcf	Billion cubic feet.

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	1) 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. 2) A delta-negative options position comprised of long and short options of the same type, either calls or puts, designed to be profitable in a declining market. An option with a lower strike price is sold and one with a higher strike price is bought.

Bearish	Believing that market prices are about to fall.

BETTA	The British Electricity Transmission and Trading Arrangement introduced in 2005 covering England, Wales and Scotland, replacing NETA which did not cover Scotland.

Bid	A motion to buy a futures or options contract at a specified price. Opposite of offer.

Bilateral Energy Trading	Trading whereby two parties (for example a generator and a supplier) enter into a contract to deliver electricity at an agreed time in the future.

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.

Boiler Room	An enterprise which often is operated out of inexpensive, low-rent quarters that uses high pressure sales tactics, generally over the telephone, and possibly false or misleading information to solicit generally unsophisticated investors.

Book Transfer	Transfer of title without actually delivering the product.

Box Spread	An options market arbitrage in which both a bull spread and a bear spread are established for a riskless profit. One spread includes put options and the other includes calls.

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.

British Thermal Unit	The amount of heat required to increase the temperature of a pound of water 1o Fahrenheit. A Btu is used as a common measure of heating value for different fuels. Prices of different fuels and their units of measure (dollars per barrel of crude, dollars per ton of coal, cents per gallon of gasoline, cents per thousand cubic feet of natural gas) can be easily compared when expressed as dollars and cents per million Btus.

Broker	1) An individual who is paid a fee or commission for acting as an agent in making contracts, sales, or purchases. 2) A floor broker is a person who actually executes trading orders on the floor of an exchange. 3) 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.

BS&W	Bottom sediment and water, often found in crude oil and residual fuel.

Btu	See British thermal unit.

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	1) 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. 2) A delta-positive options position composed of both long and short options of the same type, either calls or puts, designed to be profitable in a rising market. An option with a lower strike price is bought and one with a higher strike price is sold.

Bullion	Precious metals cast into bars or other uncoined form.

Bullion Coin	A precious metal coin whose market value is determined by its inherent precious metal content. They are bought and sold mainly for investment purposes.

Bullish	Believing that market prices are about to rise.

Bundle	A stack of copper cathodes strapped together for shipping.

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 10.50.

Business Day	For electric utilities, as determined by the North American Electric Reliability Council (NERC), the business day typically begins at 6 A.M. (the hour ending 0700) for a 24-hour period. Holidays are also determined by NERC and are separate from U.S.-designated holidays.

Buyer's 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 seller's 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.

Calendar Spread	An options position comprised of the purchase and sale of two options contracts of the same type that have the same strike prices but different expiration dates. Also known as a horizontal, or time spread.

Call Option	An option that gives the buyer (holder) the right, but not the obligation, to buy a futures contract (enter into a long futures position) for a specified price within a specified period of time in exchange for a one-time premium payment. It obligates the seller (writer) of an option to sell the underlying futures contract (enter into a short futures position) at the designated price, should the option be exercised at that price.

Calorific Value	The ratio of energy to volume measured in mega joules per cubic meter (MJ/m).

Cap	A supply contract between a buyer and a seller, whereby the buyer is assured that he will not have to pay more than a given maximum price. This type of contract is analogous to a call option.

Capacitor	An electrical device that provides reactive power to the system and is often used to compensate for reactive load and help support system voltage.

Capacity	In reference to electricity, the maximum load that a generating unit or generating station can carry under specified conditions for a given period of time without exceeding approval limits of temperature and stress.

Capacity (purchased)	The amount of electric energy and capacity available for purchase from outside a utility system.

Carbon Emissions Trading Scheme	A scheme in which greenhouse gas emissions are controlled by setting a cap on total transmissions and allowing the market sectors to reach an economically balanced response via trading of emissions allowances. Allowances are allocated initially, perhaps through a free distribution or through an auction, and the total allocation is adjusted periodically.

Carbon Footprint	A carbon footprint can be defined as: The total amount of greenhouse gases produced to directly and indirectly support human activities, usually expressed in units of carbon dioxide (CO₂). Read more >>>

Carbon Trust	An independent not-for-profit company set up by the government with support from business to encourage and promote the development of low carbon technologies. Key to this aim is its support for UK businesses in reducing carbon emissions through funding, supporting technological innovation and by encouraging more efficient working practices.

CCGT (Combined Cycle Gas Turbine)	A gas fired electricity generation plant.

CCL Discount	The benefits of the Climate Change Levy Discount Scheme result in up to 80% discount on the CCL in return for meeting energy or carbon saving targets.

CCL Relief	A reduction of the CCL agreed as part of a trade sector Climate Change Agreement.

CFTC	See Commodity Futures Trading Commission.

Charting	The use of graphs and charts in the analysis of market behavior, so as to plot trends of price movements, average movements of price, volume, and open interest, in the hope that such graphs and charts will help one to anticipate and profit from price trends. Contrasts with fundamental analysis.

CIF	Cost, Insurance, Freight. Term refers to a sale in which the buyer agrees to pay a unit price that includes the free on board (FOB) value at the port of origin plus all costs of insurance and transportation. This type of transaction differs from a "delivered" agreement in that it is generally ex-duty, and the buyer accepts the quantity and quality at the loading port rather than paying for quality and quantity as determined at the unloading port. Risk and title are transferred from the seller to the buyer at the loading port, although the seller is obliged to provide insurance in a transferable policy at the time of loading.

City Gate	Generally refers to the location at which gas changes ownership or transportation responsibility from a pipeline to a local distribution company or gas utility.

Class of Options	All call options, or all put options, exercisable for the same underlying futures contract and which expire on the same expiration date.

Class of Service	A utility's sales categories such as residential, commercial, industrial, other, and sales for resale.

Clean Cargo	Refined products such as kerosene, gasoline, home heating oil, and jet fuel carried by tankers, barges, and tank cars. All refined products except bunker fuels, residual fuel oil, asphalt, and coke.

Clean Spark Spread	The theoretical gross profit of a gas fired power plant from selling a unit of power and having purchased fuel required to generate this unit of power along with required number of carbon allowances. Clean Spark Spread = Spark Spread � Number of Carbon Allowances Required � Price of Carbon Allowance See also: Spark Spread Dark Spread Dark Clean Spread

Clearing Member	Clearing members of the New York Mercantile Exchange accept responsibility for all trades cleared through them, and share secondary responsibility for the liquidity of the Exchange's clearing operation. They earn commissions for clearing their customers' trades, and enjoy special margin privileges. Original margin requirements for clearing members are lower than for non-clearing members and customers, and clearing members may use letters of credit posted with the clearinghouse as original margin for customer accounts as well as for their own trades. Clearing members must meet a minimum capital requirement.

Clearinghouse	An Exchange-associated body charged with the function of insuring the financial integrity of each trade. Orders are "cleared" by means of the clearinghouse acting as the buyer to all sellers and the seller to all buyers.

Climate Change Agreement	An agreement between the Government and a business user, whereby a reduced rate of Climate Change Levy is payable in return for a commitment by the user to achieve certain pre-determind targets for energy usage or carbon emissions.

Climate Change Levy (CCL)	A charge introduced by the Government on 1 April 2001 on UK non-domestic fuel. The Government's aim when introducing the levy was to encourage business to use less energy, and contribute to the reduction of Carbon Dioxide emissions.

Climate Change Programme	Published in 2000, it sets out the government and Devolved Administration strategic approach to tackling Climate Change and meeting the UK's Kyoto target of a 12% reduction in greenhouse gas emissions from 1990 levels by 2008-2012 and the domestic goal of reducing CO2 emissions by 20% by 2010.

Closing Range	A range of prices at which transactions took place at the closing of the market; buying and selling orders during the closing period might have been filled at any point within such a range.

CO2	Carbon Dioxide - A Greenhouse gas.

Cogeneration	The simultaneous production of electricity and another form of useful energy (such as heat or steam) through the sequential use of energy, resulting in increased efficiency of fuel use.

Cogenerator	A generating facility that produces electricity and another form of useful thermal energy (such as heat or steam), used for industrial, commercial, heating, or cooling purposes.

Collar	A supply contract between a buyer and seller of a commodity, whereby the buyer is assured that he will not have to pay more than some maximum price, and whereby the seller is assured of receiving some minimum price. This is analogous to an option fence, also known as a range forward.

Combination Utility	A utility which provides both gas and electric service.

Combined Heat & Power (CHP)	CHP is very efficient technology for generating electricity and heat together. A CHP plant is an installation where there is simultaneous generation of usable heat (normally for space heating) and power (usually electricity) in a single process. CHP typically achieves a 35-40% reduction in primary energy useage compared with power stations and heat only boilers.

Commission	The fee charged by a futures broker for the execution of an order.

Commission House	An organization that trades commodities and/or futures and options contracts for customer accounts in return for a fee.

Commission Merchant	One who makes a trade, either for another member of an exchange or for a non-member client, but who makes the trade in his own name and becomes liable as principal to the other.

Commitment or Open Interest	The number of open or outstanding contracts for which an individual or entity is obligated to the Exchange because that individual or entity has not yet made an offsetting sale or purchase, an actual contract delivery, or, in the case of options, exercised the option.

Commodity	As defined by the Commodity Futures Trading Commission, specifically enumerated agricultural commodities, all other goods and articles, except onions, and all services, rights, and interests in which contracts for future delivery are presently, or in the future may be, dealt.

Commodity Futures Trading Commission	A federal regulatory agency authorized under the Commodity Futures Trading Commission Act of 1974 to regulate futures trading in all commodities. The commission is comprised of five commissioners, one of whom is designated as chairman, all appointed by the President, subject to Senate confirmation. The CFTC is independent of the Cabinet departments.

Commodity Pool	A venture, usually a limited partnership, in which funds contributed by a number of investors are combined for the purpose of trading futures. Also called a commodity fund or a futures fund.

Commodity Pool Operator (CPO)	Acts as a general partner of commodity pools. CPOs hire independent Commodity Trading Advisors to handle daily trading decisions. Responsible for the pool's administration, structure, and selecting and monitoring the traders who conduct transactions using the fund's money.

Commodity Trading Advisor (CTA)	Directs trading in the managed accounts of a commodity pool. Professional money managers who manage client assets on a discretionary basis, using global futures markets as an investment medium

Communication Charge	The monthly fee payable by a customer, which covers the collection of half hourly data by the meter operator. This can be billed direct by the MOP or passed on through the current supplier.

Connection Agreement	Agreement between client and the local distribution company (for example Central Networks in the Midlands) setting out the terms and conditions with which each are bound concerning the provision and use of the connection.

Contango Market	A market situation in which prices are higher in the succeeding delivery months than in the nearest delivery month. Opposite of backwardation.

Contingency Order	An order which becomes effective only upon the fulfillment of some condition in the marketplace.

Contract	1) A term of reference describing a unit of trading for a commodity future or option. 2) An agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.

Contract Grade	That grade of product established in the rules of a commodity futures exchange as being suitable for delivery against a futures contract.

Contract Months	See delivery month.

Contract Price Structures	This indicates a supply offer, which has all delivery charges (DuoS & TuoS) built into the unit rates for the supply of electricity.

Contract Trading Volume	Daily trading volume.

Control Area	A large geographic area within which a utility (or group of utilities) regulates electric power generation in order to maintain scheduled interchanges of power with other control areas and to maintain the required system frequency.

Control Area Operator	An electric entity that operates generating capacity to meet area demand, monitors actual interchange (electric energy flowing between control areas), and can dispatch generating resources to ensure that actual interchange equals scheduled interchange.

Conversion	A delta-neutral arbitrage transaction involving a long futures contract, a long put option, and a short call option. The put and call options have the same strike price and same expiration date.

Cooperative	A group organized under law into a utility company that will generate, transmit, or distribute supplies of electric energy to a specified area not being serviced by another utility. Typically, a co-op is a not- for-profit organization.

Coordination Transactions	Short-term transactions undertaken primarily to maintain the integrity of an electricity distribution system.

Cover	To offset a short futures or options position.

Covered Writing	The sale of an option against an existing position in the underlying futures contract. For example, short call and long futures.

Crack Spreads	The simultaneous purchase or sale of crude oil against the sale or purchase of refined petroleum products. These spread differentials which represent refining margins are normally quoted in dollars per barrel by converting the product prices into dollars per barrel (multiply the cents-per-gallon price by 42) and subtracting the crude oil price.

Cross Trade	Offsetting match by a broker of the buy order of one customer against the sell order of another, or a match of a trade made by a broker with his customer, a practice that is permissible only when executed in accordance with the Commodity Exchange Act, Commodity Futures Trading Commission regulations, and rules of the contract market. Neither NYMEX Division nor COMEX Division members are permitted to take the opposite side of a customer's order, except, under certain circumstances, for trades involving long-dated (nine months or more forward) COMEX Division copper futures.

Crude Oil	A mixture of hydrocarbons that exists as a liquid in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Crude is the raw material which is refined into gasoline, heating oil, jet fuel, propane, petrochemicals, and other products.

Cubic Foot	The most common measure of gas volume, referring to the amount of gas needed to fill a volume of one cubic foot at 14.73 pounds per square inch absolute pressure and 60 degrees Fahrenheit. One cubic foot of natural gas contains, on average, 1,027 Btus.

Current Delivery Month	The futures contract which matures and becomes deliverable during the present month or the month closest to delivery. Also called the spot month.

Current Transformer	A device that is used to reduce (or increase) the supply current levels. For example a 11000/ 415 Volt transformer would convert a 11,000 volt supply to 415 volt supply.

Cushion Gas	The amount of gas required in a storage pool to maintain sufficient pressure to keep the working gas recoverable.

Customer's Installation	Any structures, equipment, lines appliances or devices used or to be used by any customer and connected directly or indirectly to the Rec's network.

Dark Clean Spread	The theoretical gross profit of a coal fired power plant from selling a unit of power and having purchased fuel required to generate this unit of power along with required number of carbon allowances. Clean Dark Spread = Dark Spread � Number of Carbon Allowances Required � Price of Carbon Allowance See also: Spark Spread Dark Spread Dark Clean Spread

Dark Spread	The theoretical gross profit of a coal fired power plant from selling a unit of power and having purchased fuel required to generate this unit of power along with required number of carbon allowances. Clean Dark Spread = Dark Spread � Number of Carbon Allowances Required � Price of Carbon Allowance See also: Spark Spread Dark Spread Dark Clean Spread

Data Aggregator	The organisation appointed to aggregate the meter-reading data received from the appointed Data Collectors and forward it to suppliers.

Data Collector	The organisation responsible for collecting, processing and validating the meter reading data, who then passes the information to the Data Aggregator.

Day Trade	The purchase and sale of a futures or an options contract on the same day. Dealer Tank Wagon Price (DTW) The price, usually of gasoline, offered by the majors which is branded and delivered to the service station on a cost, insurance, and freight basis.

De-energisation	The interruption of supply, so that electricity cannot flow from the network to the premises.

DEFRA	Department for Environment, Food and Rural Affairs.

Degree Day	A measure of the coldness of the weather (heating degree day) or its heat (cooling degree day) based on the extent to which the daily mean temperature falls below or rises above 65 degrees Fahrenheit.

Dekatherm	Ten therms, 1 million British thermal units.

Delivered	Often regarded as synonymous with cost, insurance, and freight in the international cargo trade, its terms differ from the latter in a number of ways. Generally, the seller's risks are greater in a delivered transaction because the buyer pays on the basis of landed quality/quantity. Risk and title are borne by the seller until such time as the commodity, such as oil, passes from shipboard into the connecting flange of the buyer's shore installation. The seller is responsible for clearance through customs and payment of all duties. Any in-transit contamination or loss of cargo is the seller's liability. In delivered transactions, the buyer pays only for the quantity of oil actually received in storage.

Delivery	The term has distinct meaning when used in connection with futures contracts. Delivery generally refers to the changing of ownership or control of a commodity under specific terms and procedures established by the exchange upon which the contract is traded. Typically, except for energy, the commodity must be placed in an approved warehouse, precious metals depository, or other storage facility, and be inspected by approved personnel, after which the facility issues a warehouse receipt, shipping certificate, demand certificate, or due bill, which becomes a transferable delivery instrument. Delivery of the instrument usually is preceded by a notice of intention to deliver. After receipt of the delivery instrument, the new owner typically can take possession of the physical commodity, can deliver the delivery instrument into the futures market in satisfaction of a short position, or can sell the delivery instrument to another market participant who can use it for delivery into the futures market in satisfaction of his short position or for cash, or can take delivery of the physical himself. The procedure differs for energy contracts. Bona fide buyers or sellers of the underlying energy commodity can stand for delivery. If a buyer or seller stands for delivery, the contract is held through the termination of trading. The buyer and seller each file a notice of intent to make or take delivery with their respective clearing members who file them with the Exchange. Buyers and sellers are randomly matched by the Exchange. The delivery payment is based on the contract's final settlement price.

Delivery Month	The month specified in a given futures contract for delivery of the actual physical spot or cash commodity.

Delivery Notice	A notice presented through an exchange's clearinghouse by a clearing member announcing the intention to deliver the actual commodity in satisfaction of a contract obligation.

Delivery Point(s)	Location(s) designated by an exchange at which delivery may be made in fulfillment of contract terms.

Delta	The sensitivity of an option's value to a change in the price of the underlying futures contract, also referred to as an option's futures-equivalent position. Deltas are positive for calls, and negative for puts. Deltas of deep in-the-money options are approximately equal to one; deltas of at-the-money options are 0.5; and deltas of deep out-of-the-money options approach zero.

Delta Neutral Spread	A spread where the total delta position on the long side and the total delta on the short side add up to approximately zero.

Demand	The requirement for power.

Demand Site Management	The planning, implementation, and monitoring of activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand.

Depository or Warehouse Receipt	A document issued by a bank or warehouse indicating ownership of a commodity stored in a bank depository or warehouse. In the case of many commodities deliverable against futures contracts, transfer of ownership of an appropriate depository receipt may effect contract delivery.

Derivative	Financial instrument derived from a cash market commodity, futures contract, or other financial instrument. Derivatives can be traded on regulated exchange markets or over-the-counter. For example, futures contracts are derivatives of physical commodities, options on futures are derivatives of futures contracts.

Diesel Fuel	Distillate fuel oil used in compression-ignition engines. It is similar to home heating oil, but must meet a cetane number specification of 40 or more.

Differentials	Price differences between classes, grades, and locations of different stocks of the same commodity.

Dirty Cargo	Those petroleum products which leave significant amounts of residue in tanks. Generally applies to crude oil and residual fuel oil.

Disconnection	The permanent removal of the meter, cabling and service from the property once it is established that a supply will not be required in the future. This permanently removes the MPAN.

Discount	1) A downward adjustment in price allowed for delivery of stocks of a commodity of lesser than contract grade against a futures contract. 2) Sometimes used to refer to the price differences between futures of different delivery months.

Discretionary Account	An arrangement by which the holder of an account gives written power of attorney to someone else, often a broker, to buy and sell without prior approval of the account holder. Often referred to as a "managed account."

Distillate Fuel Oil	Products of refinery distillation sometimes referred to as middle distillates; kerosene, diesel fuel, and home heating oil.

Distribution System	The local wires, transformers, substations and other equipment used to distribute and deliver energy to consumers.

Doctor Test	A qualitative method of detecting undesirable sulfur compounds in petroleum distillates; that is, determining whether an oil is sour or sweet.

Double Bottoms	A chart pattern of the price movement of a commodity that shows resistance to a falling market; the inverse of double tops. The price patterns are used by technical analysts to recognize a reversal of a price trend.

Double Tops	A chart pattern of commodity price movements that depict a rising market which hits resistance at a certain level, retreats, rises again, but still cannot breach the previous resistance point, and falls back again. The price patterns are used by technical analysts to recognize a reversal of a price trend.

Downstream	An industry term referring to commercial oil and gas operations beyond the production phase; oil refining and marketing, and natural gas transmission and distribution.

DPEI	Department of Productivity, Energy and Industry, formerly known as the Department of Trade and Industry.

Dry Gas	Gas that does not contain liquid hydro-carbons.

DUoS (Distribution Use of System)	The charges incurred for distributing electricity across the local area system to the supplied premises.

EFP	See Exchange of Futures for Physicals.

Electric Utility	An enterprise that is engaged in the generation, transmission, and/or distribution of electric energy primarily for use by the public and is the major power supplier within a designated service area. Electric utilities include: investor-owned, publicly owned, cooperatively owned, and government-owned entities.

Electronic Trader	A person who is authorized to enter orders for his own account and/or for customers' accounts on the NYMEX ACCESS electronic trading system.

Embedded Generator	A generator with a direct connection to a PES's distribution system, rather than NGC's transmission system.

End-User	The ultimate consumer of petroleum products or natural gas; most commonly refers to large commercial, industrial, or utility consumers.

Energy Watch	A non-governmental body set up to safeguard the interests of energy users.

Energy White Paper	The White Paper is the first comprehensive, forward-looking statement of UK energy policy for over 20 years. The white paper sets four new goals for energy policy: to put ourselves on a path to cut the UK's carbon dioxide emissions by 60% by the year 2050, with real progress by 2020, to maintain the reliability of energy supplies, to promote competitive energy markets in the UK and beyond and to ensure that every home is affordably heated

Enhanced Capital Allowance	Enhanced Capital Allowances (ECAs) enable a business to claim 100% first-year capital allowances on their spending on qualifying plant and machinery.

European Emissions Trading Scheme	The EU ETS is one of the policies being introduced across Europe to tackle emissions of carbon dioxide and other greenhouse gases and combat the serious threat of climate change. The scheme will commence on 1 January 2005. The phase runs from 2005-2007 and the second phase will run from 2008-2012 to coincide with the first Kyoto Commitment Period. Further 5-year periods are expected subsequently.

European Option	An option that may be exercised only on its expiration date. See also: American Option

Excess Availability Charges	A penalty charge being applied by certain suppliers to clients who are drawing kVa above their Available Supply Capacity (ASC). This can be three times the contracted pence per kVa rate. See also: Availability Charge

Exchange Certified Stocks	Stocks of commodities held in depositories or warehouses certified by an Exchange-approved inspection authority as constituting good delivery against a futures contract position. Current total certified stocks are reported in the press for many important commodities such as platinum.

Exchange of Futures for Cash	A transaction in which the buyer of a cash commodity transfers to the seller a corresponding amount of long futures contracts, or receives from the seller a corresponding amount of short futures, at a price difference mutually agreed upon. In this way, the opposite hedges in futures of both parties are closed out simultaneously.

Exchange of Futures for Physicals	A futures contract provision involving an agreement for delivery of physical product that does not necessarily conform to contract specifications in all terms from one market participant to another and a concomitant assumption of equal and opposite futures positions by the same participants at the time of the agreement.

Exercise	The process of converting an options contract into a futures position.

Exercise Price	The price at which the underlying futures contract will be bought or sold in the event an option is exercised. Also called the strike price.

Exit Point	A point of connection at which a supply of electricity may flow between the Rec's system and the client's installation, suppliers installation or the distribution system of another person.

Expiration Date	The date and time after which trading in an options contracts terminates, and after which all contract rights or obligations become null and void.

Extra High Voltage	22,000 volts or higher voltage

Extrinsic Value	The amount by which the premium exceeds its intrinsic value. Also known as time value.

Fair Value	Theoretical value.

Fast Market	Transactions in the ring that take place in such volume and with such rapidity that price reporters are behind with price quotations, so they insert "Fast" and show a range of prices.

Feasibility Study	A methodology for identifying where and how energy is used on a site within core processes and then making recommendations for reducing usage and or eliminating waste.

Feedstock	The supply of crude oil, natural gas liquids, or natural gas to a refinery or petrochemical plant or the supply of some refined fraction of intermediate product to some other manufacturing process.

Fence	A long (short) underlying position together with a long (short) out-of-the-money put and a short (long) out-of-the-money call. All options must expire at the same time.

FIA	Futures Industry Association. A national not-for-profit futures industry trade association that represents the brokerage community on industry, regulatory, political, and educational issues.

Fill	The price at which an order is executed.

Fill or Kill	An order which must be filled immediately, and in its entirety. Failing this, the order will be canceled.

Fine Weight	The weight of precious metal contained in a coin or bullion as determined by multiplying the gross weight by the fineness.

Fineness	The purity of precious metal measured in parts per thousand.

Firm Energy	The highest quality sales of electric transmission service offered to customers under a filed rate schedule that anticipates no planned interruption.

Firm Gas	Gas supplied to a customer on a guaranteed basis, without interruption.

Firm Service	Utility service which assumes no interruption except if residential customers' supply is threatened. Opposite of interruptible service.

First Notice Day	The first day on which the clearinghouse notifies clearing members of delivery allocations. Energy contracts have only one notice day. Metals contracts have notice days just prior to the beginning and end of the delivery period.

Fixed Charge	A monthly of quarterly charge levied by the supplier and is in addition to the standing charge.

Floor	1) The main trading area of an exchange. 2) A supply contract between a buyer and seller of a commodity, whereby the seller is assured that he will receive at least some minimum price. This type of contract is analogous to a put option.

Floor Broker	An exchange member who executes orders to buy or sell futures and options in the trading ring on the floor of a commodities exchange.

Floor Trader or Local	An exchange member who buys or sells futures and/or options for his own account.

Force Majeure	A standard clause which indemnifies either or both parties to a transaction whenever events which the Exchange declares to be reasonably beyond the contract.

Forward Contract	A supply contract between a buyer and seller, whereby the buyer is obligated to take delivery and the seller is obligated to provide delivery of a fixed amount of a commodity at a predetermined price on a specified future date. Payment in full is due at the time of, or following, delivery. This differs from a futures contract where settlement is made daily, resulting in partial payment over the life of the contract.

Forwards Contract	An agreement to buy electricity from another party at a specified time in the future at a specified price with money changing hands at the delivery date.

Fossil Fuel	An energy source formed in the Earths crust from decayed organic material. The common fossil fuels are oil, coal, and natural gas.

Fractionation	The process whereby saturated hydrocarbons from natural gas are separated into distinct parts or "fractions" such as propane, butane, ethane, etc.

Free on Board (FOB)	A transaction in which the seller provides a commodity at an agreed unit price, at a specified loading point within a specified period; it is the responsibility of the buyer to arrange for transportation and insurance.

Fuel Oil	Refined petroleum products used as a fuel for home heating and industrial and utility boilers. Fuel oil is divided into two broad categories, distillate fuel oil, also known as No. 2 fuel, gasoil, or diesel fuel; and residual fuel oil, also known as No. 6 fuel, or outside the United States, just as fuel oil. No. 2 fuel is a light oil used for home heating, in compression ignition engines, and in light industrial applications. No. 6 oil is a heavy fuel used in large commercial, industrial, and electric utility boilers.

Fundamental Analysis	The study of pertinent supply and demand factors which influence the specific price behavior of commodities. See also Technical Analysis.

Fungible	Interchangeable. Products which can be substituted for purposes of shipment or storage.

Futures Commission Merchant	An FCM is the only industry participant who receives, handles, and manages customer funds, margin payments, and commission charges. He is also responsible for confirmation of trade slips, customer statements, and guarantees.

Futures Contract	Similar to a forwards contract these are normally trade through an exchange on standard contract terms with profits or losses calculated and paid daily.

Futures-Equivalent	A term frequently used with reference to speculative position limits for options on futures contracts. The futures-equivalent of an options position is the number of options multiplied by the previous day's risk factor or delta for the options series. For example, 10 deep out-of-the money options with a risk factor of 0.20 would be considered two futures-equivalent contracts. The delta or risk factors used for this purpose is the same as that used in delta-based margining and risk analysis systems.

Gamma	The sensitivity of an option's delta to changes in the price of the underlying futures contract.

Gas Substation	A pressure reduction station located on the customers' premises where gas is reduced from mains pressure regulated at a medium or low pressure for domestic or industrial use.

Gasoil	European designation for No. 2 heating oil and diesel fuel.

Gasoline, Straight-Run	Also known as raw gasoline. Gasoline which is obtained directly from crude oil by fractional distillation. Straight-run gasoline generally must be upgraded to meet current motor fuel specifications.

Gate Closure	In relation to a settlement period, the time 3.5 hours before the start of that settlement period. It defines the moment when bilateral contracting ends and the Balancing Mechanism for each associated trading period begins.

Generation	This covers the production of electricity at power stations. At present the main fuels used are gas, nuclear and coal, although there is now a growing use of renewable forms of energy, such as wind power, the burning of gas from landfill and waste incineration.

Gigajoule (GJ)	One billion joules, approximately equal to 948,211 British thermal units. One million Btus equals 1.0546175 GJ.

Gigawatt (GW)	A unit of power equal to 1 billion watts; 1 million kilowatts, or 1,000 megawatts.

Gigawatt-hour (GWh)	A unit of energy equal to million kilowatt-hours. 1 GWh is equivalent to the total electricity typically used by 250 homes in one year.

Good Delivery	Approved metals brands acceptable for delivery against the metals contracts.

Good till Canceled	An order to be held by a broker until it can be filled or until canceled.

Grade 1 Copper	Copper which is good for delivery against the COMEX Division high grade copper futures contract and meets the ASTM specification B115-91.

Grid Supply Point	A point of supply from the national transmission system to the local system of the distribution network operator.

GSS	Guaranteed Service Standard - customer service standards of performance that are set by OFGEM.

Half-Hour Data (HHD)	This is the product of the half-hour data meter. The data is used for invoicing, tendering and reporting purposes.

Hallmark	A stamped impression on the surface of a precious metals bar that indicates the producer, serial number, weight, and purity of metal content.

Heating Oil	No. 2 fuel oil, a distillate fuel oil used either for domestic heating or in moderate capacity commercial-industrial burners.

Heavy Crude	Crude oil with a high specific gravity and a low API gravity due to the presence of a high proportion of heavy hydrocarbon fractions.

Hedge	The initiation of a position in a futures or options market that is intended as a temporary substitute for the sale or purchase of the actual commodity. The sale of futures contracts in anticipation of future sales of cash commodities as a protection against possible price declines, or the purchase of futures contracts in anticipation of future purchases of cash commodities as a protection against the possibility of increasing costs.

Hedge Ratio	1) Ratio of the value of futures contracts purchased or sold to the value of the cash commodity being hedged, a computation necessary to minimize basis risk. 2) The ratio, determined by an option's delta, of futures to options required to establish a riskless position. For example, if a $1/barrel change in the underlying futures price leads to a $0.25/barrel change in the options premium, the hedge ratio is four (four options for each futures contract).

Hedger	A trader who enters the market with the specific intent of protecting an existing or anticipated physical market exposure from unexpected or adverse price fluctuations.

Historical Volatility	The annualized standard deviation of percent changes in futures prices over a specific period. It is an indication of past volatility in the marketplace.

Horizontal Spread	Calendar or time spread.

HV	High Voltage (Normally 11,000 Volts).

Hydrocarbons	Organic chemical compounds containing hydrogen and carbon atoms. They form the basis of all petroleum products.

Imbalance	A situation where there is a difference between the amount of power produced and the amount of electricity contracted or sold.

Imbalance Energy	Discrepancy between the amount that a seller contracted to deliver and the actual volume of power delivered. Imbalances are resolved through monetary payment.

Immediate or Cancel	An order which must be filled immediately or be canceled. IOC orders need not be filled in their entirety.

Implied Volatility	A measurement of the market's expected price range of the underlying commodity futures based on market-traded options premiums.

IMServ	IMServ are an independent data collector of Half Hourly Data, from whom Broadfern purchase data. IMServ are responsible for checking the accuracy of the data.

In-the-Money	An option that can be exercised and immediately closed out against the underlying market for a cash credit. The option is in-the-money if the underlying futures price is above a call option's strike price, or below a put option's strike price.

In-well Transfer	An inventory transfer of propane held in underground caverns or storage.

Inadvertent Energy	The imbalance of energy flows back and forth that are on-going and routine between a generator of power and the centers of demand. These imbalances are typically settled through exchanges of physical product.

Independent	Term generally applies to a non-integrated oil or natural gas company, usually active in only one or two sectors of the industry. An independent marketer buys petroleum products from major or independent refiners and resells them under his own brand name or buys natural gas from producers and resells it. There are also independents which are active exclusively either in oil or gas production or refining.

Independent Power Producer (IPP)	A non-utility power generating company that is not a qualifying facility (See Qualifying Facility).

Integration	A term that describes the degree in, and to, which one given company participates in all phases of the petroleum industry.

Interconnector	A connection or link between power systems that enables them to draw on each others' reserve capacity in time of need.

Interruptible Gas	Gas supplied to a customer whose site has an alternate fuel source, on the basis that the supply might be interrupted for a specified period.

Interruptible Service	Utility service which expects and permits interruption on short notice, generally in peak-load periods, in order to meet the demand by firm service customers. Interruptible service customers usually pay a lower rate than firm service customers. Opposite of Firm Service.

Intrinsic Value	The amount by which an option is in-the-money. An option which is not in-the-money has no intrinsic value. For calls, intrinsic value equals the difference between the underlying futures price and the option's strike price. For puts, intrinsic value equals the option's strike price minus the underlying futures price. Intrinsic value is never less than zero.

Introducing Broker	A firm engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery.

Inverted Market	A futures market is said to be inverted when distant contract months are selling at a discount to nearby contract months; also known as backwardation.

Invisible Supply	Uncounted stocks of a commodity in the hands of wholesalers, manufacturers and producers which cannot be identified accurately; stocks outside commercial channels but theoretically available to the market.

IPPC	Regulatory demands on industrial activity throughout the EC are more stringent than ever. The Integrated Pollution and Control (IPPC) directive means companies face new aspects for consideration, controls to put in place and an increase in work required to obtain and comply with environmental permits.

Jet Fuel	Kerosene-type; high-quality kerosene product used primarily as fuel for commercial turbojet and turboprop aircraft engines.

Jobber	A middleman. A gasoline jobber, for example, might buy from refiners and would resell to small distributors or consumers.

Joule	A metric unit of energy.

Karat	A measure of the purity of gold. Pure gold is 24-karat.

Kilovolt Amperes (KVA)	Also known as Total Power. The resultant effect of the active (kW) and reactive (kVAr) power is the total power measured in kVa. Kva = kW/power factor.

Kilowatt (kW)	A standard unit of electrical power equal to 1,000 watts, or to energy consumption at a rate of 1,000 joules per second.

Kilowatt Hour (Kwh)	A unit of energy consumption. Amount of electricity needed to light ten 100-watt light bulbs for a one-hour period. One thousand watts used for one hour.

Kyoto Agreement	An international Agreement signed by countries agreeing to limit or reduce their global emissions.

Landed Price	The actual delivered cost of oil to a refiner, taking into account all costs from production or purchase to the refinery.

Last Notice Day	The final day on which notices of intent to deliver on futures contracts may be issued.

Last Trading Day	The final trading day for a particular delivery month futures contract or options contract. Any futures contracts left open following this session must be settled by delivery.

Lease	Financial instrument based upon the contango in the gold or silver market to finance precious metals inventory.

Legal Tender	Coins that have been authorized by Congress. This includes circulating coins and all commemorative coins legislated by Congress.

Licensed warehouses	Warehouses which have been approved for the storage of copper deliverable against the COMEX Division copper futures contract.

Licensed Weighmaster	An organization approved by the Exchange to witness and verify the weighing of copper delivered against the COMEX Division copper futures contract.

Lifting	Refers to tankers and barges loading cargoes of petroleum at a terminal or transshipment point.

Light Crude	Crude oil with a low specific gravity and high API gravity due to the presence of a high proportion of light hydrocarbon fractions.

Light Ends	The more volatile products of petroleum refining, such as butane, propane, and ethane.

Limit	The maximum daily allowable amount a futures price may advance or decline in any one day's trading session. Limits are also placed on the number of positions a participant may hold in the market.

Limit Order	A contingent order for an options or futures trade specifying a certain maximum (or minimum) price, beyond which the order (buy or sell) is not to be executed.

Liquefied Natural Gas (LNG)	Natural gas which has been made liquid by reducing its temperature to minus 258 degrees Fahrenheit at atmospheric pressure. Its volume is 1/600 of gas in vapor form.

Liquefied Petroleum Gas (LPG)	Propane, butane, or propane-butane mixtures derived from crude oil refining or natural gas fractionation. For convenience of transportation, these gases are liquefied through pressurization.

Liquid Market	Propane, butane, or propane-butane mixtures derived from crude oil refining or natural gas fractionation. For convenience of transportation, these gases are liquefied through pressurization.

Liquidation	The closing out of futures and options positions.

Liquidity	A market is said to be "liquid" when it has a high level of trading activity and open interest.

Load	The amount of electric power delivered or required at any specific point or points on an electrical system. The requirement originates at the energy-consuming equipment of the customer.

Load Factor	Measures the relationship between unit consumption and maximum demand and is the percentage capacity utilisation figure of a site's power consumption. To calculate load factor take the total number of units of consumption, divide by the maximum demand, divide by the number of hours in the period, and multiply by 100.

Load Following	The daily varying of power output by a generator.

Load Management	The process of shifting the use of electricity from periods of high demand to periods of lower demand, when the cost of electricity is usually lower.

Local	An exchange member who buys or sells futures and/or options for his own account.

Local Distribution Company (LDC)	Company that distributes natural gas primarily to end-users. A gas utility.

Locked Market	A market where prices have reached their daily trading limit and trading can only be conducted at that price or prices which are closer to the previous settlement price.

Long	1) The market position of a futures contract buyer whose purchase obligates him to accept delivery unless he liquidates his contract with an offsetting sale. 2) One who has bought a futures contract to establish a market position. 3) In the options market, position of the buyer of a call or put options contract. Opposite of short.

Long Hedge	Purchase of futures against the future market price purchase or fixed price forward sale of a cash commodity to protect against price increases.

Long the Basis	A person or firm that has bought the spot commodity and hedged with a sale of futures is said to be long the basis.

Lot	Any definite quantity of a futures commodity of uniform grade; the standard unit of trading.

Low Voltage	Low Voltage, normally at 240 or 415 Volts.

LV	Low Voltage, normally at 240 or 415 Volts.

Major	A term broadly applied to those multinational oil companies which by virtue of size, age, or degree of integration are among the preeminent companies in the international petroleum industry.

Managed Load	The fixed energy base load of the total curve. This can be purchased either all at once or step-by-step.

Margin	The amount of money or collateral deposited by a customer with his broker, or deposited by a broker with a clearing member, or by a clearing member with the clearinghouse, for the purpose of insuring the broker or clearinghouse against adverse price movement on open futures contracts. The margin is not partial payment on a purchase. 1) Initial margin is the minimum deposit per contract required by the broker when a futures position is opened. 2) Maintenance margin is a sum which must be maintained on deposit at all times. If the equity in a customers' account drops to, or under, that level because of an adverse price movement, the broker must issue a margin call to restore the customers' equity. Margins are set by the Exchange based on its analysis of price risk volatility in the market at that time. See variation margin.

Margin Call	A demand for additional margin funds when futures prices move adverse to a trader's position, or if margin requirements are increased. Buyers of options are not subject to margin calls.

Marked-to-Market	Daily cash flow system used by U.S. futures exchanges to maintain a minimum level of margin equity for a given futures or options contract position by calculating the gain or loss in each contract position resulting from changes in the price of the futures or options contracts at the end of each trading day.

Market Correction	In technical analysis, a small reversal in prices following a significant trending period.

Market Maker	An independent trader or trading firm which is prepared to buy and sell futures or options contracts in a designated market. Market makers provide a two-sided (bid and ask) market and greater liquidity.

Market Order	An order to be filled immediately at the current market price.

Market-if-Touched Order	An order that becomes a market order when a particular price is reached. A sell MIT is placed above the market; a buy MIT is placed below the market.

Market-on-Close	An order to buy or sell at the end of the trading session at a price within the closing range of prices.

Maximum Demand	The highest average demand (in kW or kVA) occurring in a half hour period.

Maximum Price Fluctuation	A commodity exchange's established maximum limits for fluctuations in futures prices during any one trading session.

Mcf	Thousand cubic feet.

Megawatt (MW)	1,000 kilowatts, or 1,000,000 watts. It is used to refer to sites with an average maximum demand exceeding or equal to 1,000 kW in the highest three months of the year. The megawatt market was the first to deregulate: - 1st October 1990.

Megawatt Hour (Mwh)	Amount of electricity needed to light ten thousand 100-watt light bulbs for a one-hour period. One million watts used for one hour.

Meter Operator (MOP or MO)	Any qualifying site which wishes to benefit from contract rates must have appointed a meter operator. This is usually the host REC. It is the function of the meter operator to run the half-hour data meter and collect the data. A meter operator agreement costs between Any qualifying site which wishes to benefit from contract rates must have appointed a meter operator. This is usually the host REC. It is the function of the meter operator to run the half-hour data meter and collect the data. A meter operator agreement costs between GBP 160.00 & GBP 280.00 per annum.

Meter Point Reference Number	A unique reference number identifying each meter and used in the preparation of supply tenders.

Middle Distillate	Hydrocarbons that are in the so-called "middle boiling range" of refinery distillation. Examples are heating oil, diesel fuels, and kerosene.

Minimum Price Fluctuation	Minimum unit by which a futures price or an options premium can fluctuate per trade, also known as tick size.

MMBtu	One million British thermal units, one dekatherm. Approximately equal to a thousand cubic feet (Mcf) of natural gas.

Mogas	Industry slang for motor gasoline.

Motor Gasoline	A complex mixture of relatively volatile hydrocarbons, with or without small quantities of additives, which have been blended to form a fuel suitable for use in spark-ignition engines.

Motor Oil	Refined lubricating oil, usually containing additives, used in internal combustion engines.

MPAN Core	A 13-digit number (the bottom line of the Supply Number) made up of the: Distributor Identifier (first two digits), the company which provides the distribution network for the supply address. Meter Point unique reference (11-digit number), which is linked to the supply address.

MPRS	The Meter Point Registration System is owned by the distribution companies. It contains all the MPAN's for that distribution area.

MW	The equivalent to one thousand kilowatts (kW).

Naked	A long or short market position taken without having an offsetting short or long position. A trader who executes one side of a spread is said to be naked until he executes the other side.

Naphtha	A volatile, colorless product of petroleum distillation. Used primarily as a paint solvent, cleaning fluid, and blendstock in gasoline production.

Naphthenes	One of the three basic hydrocarbon classifications found naturally in crude oil. Naphthenes are widely used as petrochemical feedstocks.

National Futures Association	Futures industry trade association which promulgates rules of conduct and mediates disputes between customers and brokers.

Natural Gas	A naturally occurring mixture of hydrocarbon and non-hydrocarbon gases found in porous rock formations. Its principal component is methane.

Natural Gas Liquids (NGL)	A general term for all liquid products separated from natural gas in a gas processing plant. NGLs include propane, butane, ethane, and natural gasoline.

NERC	North America Electric Reliability Council. A group formed in 1968 by the electric utility industry to promote the reliability and adequacy of bulk power supply in the electric utility systems of North America. NERC consists of 10 regional reliability councils and encompasses essentially all the power regions of the contiguous United States, Canada, and Mexico. The NERC regions are: Alaskan System Coordination Council, ASCC; East Central Reliability Coordination Agreement, ECAR; Electric Reliability Council of Texas, ERCO; Mid-America Interpool Network, MAIN; Mid-Atlantic Area Council, MAAC; Mid-Continent Area Power Pool, MAPP; Northeast Power Coordinating Council, NPCC; Southeastern Electric Reliability Council, SERC; Southwest Power Pool, SPP; Western System Coordinating Council, WSCC.

Net Capacity	The maximum load that a generating unit, station or other electrical apparatus can carry under specified conditions for a given period of time without exceeding approved limits of temperature.

Net Position	The difference between an individual or firm's open long contracts and open short contracts in any one commodity.

NETA	New Electricity Trading Arrangement. This came into force on the 27th March 2001 and replaced the old 'electricity pool'. NETA is a new wholesale market, comprising trading between generators and suppliers of electricity in England and Wales. Under NETA, bulk electricity will be traded forward through bi-lateral contracts and on one or more power exchanges. Those trading will include generators, suppliers, traders and customers.

Netback	Industry term referring to the net free on board cost of product offered on a delivered or cost, insurance, and freight basis. It is derived by subtracting all costs of shipment from the landed price.

Neutral Spread	Another name for a delta neutral spread. Spreads may also be lot neutral, where the total number of long contracts and the total number of short contracts of the same type are approximately equal.

NGC	National Grid Company, the company which runs the England and Wales Balancing Mechanism and transmission system.

NHH	Non Half hourly sites - sites that take a power supply less than 100kW.

Nominal Price	The declared price for a futures month sometimes used in place of a closing price when no recent trading has taken place in that particular delivery month; usually an average of the bid and asked prices.

Non-associated Gas	Natural gas in a reservoir which contains no crude oil.

Non-Firm Energy	The quality sale of transmission service offered to customers that anticipates possible interruption of deliveries.

Notional Settlement	A reference price based on trading activity during a certain range close to the end of the day that is used to calculate the maximum daily price fluctuation for trading on the NYMEX ACCESS after-hours electronic trading system when the regular settlement price has not been established in time for the start of the NYMEX ACCESS session. The system is then updated with final settlement prices later in the session.

NYMEX ACCESS	NYMEX ACCESS is an international after-hours trading system offered by the New York Mercantile Exchange. The Exchange provides the user with the equipment, software, and services. ACCESS stands for American Computerized Commodity Exchange System and Services.

Octane Number	A measure of the resistance of gasoline to pre-ignite or knock when burned in an internal combustion engine.

Off-Peak	The load for the remaining hours that are not on-peak.

Offer	A motion to sell a futures or options contract at a specified price. Opposite of bid.

Offset	A transaction which liquidates or closes out an open contract position. In spread positions, one side offsets the other without liquidating the entire position. Risk is reduced when one side offsets the other.

OFGEM	OFGEM is the Office of Gas and Electricity Markets, regulating the gas and electricity industries in Great Britain. Ofgem is governed by an authority and its powers are provided for under the Gas Act 1986, the Electricity Act 1989 and the Utilities Act 2000. Everything that Ofgem does is designed to promote and protect the interests of gas and electricity customers.

Omnibus Account	An account carried by one futures commission merchant with another in which the transactions of two or more persons are combined rather than designated separately and the identity of the individual accounts is not disclosed.

On-Peak	Refers to hours of the business day when demand is at its peak. For example, the NYMEX Division California-Oregon border and Palo Verde electricity futures contracts define the on-peak period from the hour ending 0700 to the hour ending 2200 (6 A.M. to 10 P.M.), prevailing time. In the physical market, on-peak definitions vary by North America Electric Reliability Council region.

One Cancels the Other	Two orders submitted simultaneously, either of which may be filled. If one order is filled, the other is considered to be canceled.

Open Interest or Commitment	The number of open or outstanding contracts for which an individual or entity is obligated to the Exchange because that individual or entity has not yet made an offsetting sale or purchase, an actual contract delivery, or, in the case of options, exercised the option.

Open Order	A resting order that is good until canceled.

Open Outcry	A method of public auction for making verbal bids and offers for contracts in the trading pits or rings of commodity exchanges.

Opening Price	The price for a given futures commodity that is generated by trading through open outcry during the opening range of trading on a commodity exchange.

Option	A contract which gives the holder the right, but not the obligation, to purchase or to sell the underlying futures contract at a specified price within a specified period of time in exchange for a one-time premium payment. The contract also obligates the writer, who receives the premium, to meet these obligations. See also: American Option European Option

Original Margin	The initial deposit of funds, as good faith monies, when a position is initiated in order to guarantee fulfillment of its obligations. Also known as initial margin.

Out-of-the-Money	An option which has no intrinsic value. For calls, an option whose exercise price is above the market price of the underlying future. For puts, an option whose exercise price is below the futures price.

Outages	A planned outage is the shutdown of a generating unit, transmission line, or other facility for inspection and maintenance, in accordance with an advance schedule. A forced outage is the unplanned loss of service of a generating unit, transmission line, or other facility for purposes other than inspection and maintenance.

Overbought	A technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors.

Oversold	A technical opinion that the market price has declined too steeply and too fast in relation to underlying fundamental factors.

Overwrite	The writing of more options than one expects to have exercised. Call options are overwritten because the writer considers the underlying overvalued. Put options are overwritten because the underlying is considered undervalued.

PAD (or PADD)	Petroleum Administration for Defense District. The United States is divided into five distinct marketing regions in which prices might differ due to variations in the supply or demand.

Paper Barrels	A term used to denote trade in non-physical oil (futures, forwards, swaps, etc.) markets which give a buyer or seller the right to a certain quantity and quality of crude oil or refined products at a future date, but not to any specific physical lot.

Par or Basis Grade	The grade or grades specified in a given futures contract for delivery. A contract may permit substitutions for and deviations from the par grade subject to specified premiums or discounts.

Peak Demand	The maximum load during a specified period of time.

Petrochemical	An intermediate chemical derived from petroleum, hydrocarbon liquids, or natural gas, such as ethylene, propylene, benzene, toluene, and xylene.

Petroleum	A generic name for hydrocarbons, including crude oil, natural gas liquids, refined, and product derivatives.

Pin Risk	The risk to a trader who has sold an option that, at expiration, has a strike price identical to, or pinned to, the underlying futures price. In this case, the trader will not know whether he will be required to assume his options obligations.

Pipeline	A pipe through which oil or natural gas is pumped between two points, either offshore or onshore.

Pit or Ring		The place on the floor of an exchange where a commodity futures or options contract is traded by open outcry. Platinum Group Metals (PGM) Platinum and related metals, including palladium, rhodium, ruthenium, and iridium.

Plant Mothballing	When a plant is not operating because there is no demand for its services the plant is 'mothballed'.

Point or Tick	The smallest monetary unit of change in a futures price or an options premium.

Position	The net total of a trader's open contracts, either long or short, in a particular underlying commodity.

Position Limit	For a single trader or firm, the maximum number of allowable open contracts in the same underlying commodity.

Posted Price	The price some refiners will pay for crude of a certain API gravity from a particular field or area.

Pour Point	A temperature 5 degrees Fahrenheit higher than the temperature at which crude oil or a refined product stops flowing.

Power Factor	A Power Factor is a measure of how effectively electricity is being used on a site. Certain types of equipment cause poor power factors, which reduces the capacity of the network to supply power. Distribution companies will charge customers for this through reactive power charges.

Power Marketer	A wholesale power entity that has registered with the Federal Energy Regulatory Commission to buy and sell wholesale power from and to each other and other public entities at market-derived prices. Power marketing companies include investor-owned, utility-affiliated companies; natural gas marketing companies; financial intermediaries; independent power producers; and entrepreneurs. Typically, power marketers do not own generating facilities.

Premium	1) The price or cost of an option determined competitively by buyers and sellers in open outcry trading on the exchange trading floor. 2) An upward adjustment in price allowed for delivery of a commodity of higher grade against a futures contract.

Price Discovery	The manner of making prices visible and readily available to the public.

Price Gaps	A chart pattern of the price movement of a commodity when the low price of one bar on a chart is higher than the high of the preceding bar (or inversely, the high is lower than the low of the preceding bar); depicting a price or price range where no trades take place. The price patterns are used by technical analysts to try to recognize changes in a price trend.

Primary Stocks	Stocks of crude oil or refined products held in storage at leases, refineries, natural gas processing plants, pipelines, tankfarms, and bulk terminals that can store at least 50,000 barrels of refined products.

Processing Plant	Plant which separates natural gas into methane and the various other gases (e.g., propane, butane, ethane).

Prompt Barrel	Product which will move or become available within three to four days.

Propane	A natural hydrocarbon occurring in a gaseous state under normal atmospheric pressure and temperature, however, propane is usually liquefied through pressurization for transportation and storage. Propane is primarily used for rural heating and cooking and as a fuel gas in areas not serviced by natural gas mains and as a petrochemical feed stock.

Pump-Over	An intra, or inter-facility transfer. For example, when one pipeline pumps crude oil or refined products from its tanks or mainline into the mainline or storage tank of the receiving pipeline.

Put Option	An option which gives the buyer, or holder, the right, but not the obligation, to sell a futures contract at a specific price within a specific period of time in exchange for a one-time premium payment. It obligates the seller, or writer, of the option to buy the underlying futures contract at the designated price, should an option be exercised at that price. See call option.

Qualifying Facility (QF)	A generator or small power producer that meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission, and has filed with FERC for QF status or has self-certified. QFs are physical generating facilities.

Rack Price	Price charged by a supplier to a customer that buys transport truck lots at a terminal, on a free on board basis.

Rally	An advancing price movement following a decline in a market.

Range	The difference between the highest and lowest prices recorded during a given trading period.

Ratio Spread	Any spread where the number of long market contracts and the number of short market contracts are unequal.

Reactive Charges	Charges applied to a client's invoice in cases where certain suppliers and distribution companies enforce a penalty for reactive power use.

Real Power	See Active Power.

Refiner-Distributor	A company that acts as a wholesaler of gasoline, heating oil, or other products which operates its own refinery; may also retail and buy additional supplies to supplement its own refining output.

Refinery	A plant used to process crude oil or metals. An oil refinery separates the fractions of crude oil and converts them into usable products. A metals refinery removes impurities, bringing the metal up to designated purity specifications.

Reforming Process	The use of heat and catalysts to effect the rearrangement of certain hydrocarbon molecules without altering their composition appreciably; for example, the conversion of low-octane naphthas or gasolines into high-octane number products.

Regulator	OFGEM is the Office of the Gas and Electricity Markets, regulating the gas and electricity industries in the UK. You can get further information about gas and electricity from Energywatch, the gas and electricity consumer organisation. This is a statutory body representing the interests of gas and electricity consumers in the UK.

Reinforcement	Any alteration to the existing system designed to enable the system to distribute an increased amount of electricity.

Renewable Energy	Energy derived from resources that are regenerative. This includes solar power, wind, wave and tide and hydroelectricity. Wood, straw and waste are often called solid renewable energy, while landfill gas and sewerage gas can be described as gaseous renewable.

Renewable Obligation	The obligation placed on licensed electricity suppliers to deliver a specified amount of their electricity from eligible sources.

Reportable Position	The number of futures contracts, as determined by the Exchange or the Commodity Futures Trading Commission, above which a customer must be identified daily to the Exchange and to the Commission with regard to the size of his position by commodity, by delivery month, and by purpose of the trading.

Residual Fuel Oil	Heavy fuel oil produced from the residue in the fractional distillation process rather than from the distilled fractions.

Resistance	Opposite of support.

Resting Order	An order away from the market, waiting to be executed.

Rollover	A special futures straddle trading procedure involving the shift of one month of a straddle into another future month while maintaining the other contract month of the original spread position. The shift can take place in either the long or short straddle month.

Round Lot	A quantity of a commodity equal in size to the corresponding futures contract for the commodity, as distinguished from a job lot, which may be larger or smaller than the contract.

Roundturn	The completion of both a purchase and sale of a commodity futures contract.

Scalper	A speculator on the trading floor of an exchange who buys and sells rapidly, with small profits or losses, holding his positions for only a short time during a trading session. Typically a scalper will stand ready to buy at a fraction below the last transaction price and to sell at a fraction above, thus creating market liquidity.

Seller's Market	A condition of the market in which there is a scarcity of goods available and hence sellers can obtain better conditions of sale or higher prices. Opposite of buyer's market.

Selling Hedge (or Short Hedge)	Selling futures contracts to protect against possible decreased prices of commodities. Also see hedging.

Serial Expiration	Options on the same underlying futures contract which expire in more than one month. NYMEX Division platinum options have serial expiration.

Series	All options of the same class which share a common strike price.

Settlement or Settling Price	The price established by the Exchange settlement committee at the close of each trading session as the official price to be used by the clearinghouse in determining net gains or losses, margin requirements, and the next day's price limits. The term "settlement price" is often used as an approximate equivalent to the term "closing price." The close in futures trading refers to a brief period at the end of the day, during which transactions frequently take place quickly and at a range of prices immediately before the bell. Therefore, there frequently is no one closing price, but a range of prices. The settlement price is derived by calculating the weighted average of prices during that period.

Short	1) The market position of a futures contract seller whose sale obligates him to deliver the commodity unless he liquidates his contract by an offsetting purchase. 2) A trader whose net position in the futures market shows an excess of open sales over open purchases. 3) The holder of a short position. 4) In the options market, the position of the seller of a call or a put option. The short in the options market is obliged to take a futures position if he is assigned for exercise. Opposite of long.

Short Selling	Selling a contract with the idea of delivering or of buying to offset it at a later date.

Short the Basis	The purchase of futures as a hedge against a commitment to sell in the cash or spot markets. See hedging.

Site Survey	A site survey is the process used to obtain a preliminary assesment of energy use. It is carried out on site and usually includes a review of current energy policy, energy managment processes and staff awareness and an inspection of all on-site power services and areas of major energy use.

SOQ	Supply Offtake (Daily) Quantity measures in kWh.

Sour Gas	Natural gas found with a sufficiently high quantity of sulfur to require purifying prior to shipment or use.

Sour or Sweet Crude	Industry terms which denote the relative degree of a given crude oil's sulfur content. Sour crude refers to those crudes with a comparatively high sulfur content, 0.5% by weight and above; sweet refers to those crudes with sulfur content of less than 0.5%.

Spark Spread	The theoretical gross profit of a gas fired power plant from selling a unit of electricity and having purchased fuel required to generate this unit of electricity. Spark Spread = Price of Electricity � Price of Gas / Electric Efficiency of Power Plant Prices must be in the same currency and must refer to the same energy unit in the above formula. See also: Clean Spark Spread Dark Spread Dark Clean Spread

Specific Gravity	The ratio of the density of a substance at 60 degrees Farenheit to the density of water at the same temperature.

Specifications	1) Contract terms specified by the Exchange. 2) Term referring to the properties of a given crude oil or refined petroleum product, which are "specified" since they often vary widely even within the same grade of product. In the normal process of negotiation, seller will guarantee buyer that the product or crude to be sold will meet certain specified limits. Generally, the major properties of oil that are guaranteed are API gravity, sulfur, pour point, viscosity, and BS&W.

Speculative Position Limit	The maximum position, either net long or net short, in one commodity futures or options, or in all futures or options of one commodity combined, which may be held or controlled by an entity without a hedge exemption as prescribed by an exchange or the Commodity Futures Trading Commission.

Speculator	A trader who hopes to profit from the specific directional price move of a futures or options contract, or commodity.

Spot	Term which describes one-time open market case (CHANGE TO CASH) transaction, where a commodity is purchased "on the spot" at current market rates. Spot transactions are in contrast to term sales, which specify a steady supply of product over a period of time.

Spot Month	The futures contract closest to maturity. The nearby delivery month.

Spread (Futures)	The simultaneous purchase and sale of futures contracts for different months, different commodities, or different grades of the same commodity.

Spread (Options)	The purchase and sale of options which vary in terms of type (call or put), strike prices, expiration dates, or both. May also refer to an options contract purchase (sale) and the simultaneous sale (purchase) of a futures contract for the same underlying commodity.

Standing Charge	A Monthly or quarterly charge levied by the local distribution company.

Stock-Type Settlement	A settlement procedure in which the purchase of a contract requires immediate and full payment by the buyer to the seller. In stock-type settlement, the actual cash profit or loss from a trade is not realized until the position is liquidated. NYMEX Division energy and platinum options have this type of settlement procedure, which differs from that in the futures market where gains and losses are realized on a daily basis.

Stop Limit Order	An order that goes into force as soon as there is a trade at the specified stop price. The order, however, can only be filled at the limit price or better. The stop price and the limit price can be the same or different. The stop price is the price level specified in the order.

Stop-Loss	A resting order designed to close out a losing position when the price reaches a level specified in the order. It becomes an at-the-market order when the "stop" price is reached. Individuals also use stops to enter the market when the prices reach a specified level.

Straddle (Futures)	Also known as a spread, the purchase of one futures month against the sale of another futures month of the same commodity. A straddle trade is based on a price relationship between the two months.

Straddle (Options)	The purchase or sale of both a put and a call having the same strike price and expiration date. The buyer of a straddle benefits from increased volatility, and the seller benefits from decreased volatility.

Strangle	An options position consisting of the purchase or sale of put and call options having the same expiration but different strike prices.

Strike Price	The price at which the underlying futures contract is bought or sold in the event an option is exercised. Also called an exercise price.

Strip	The simultaneous purchase (or sale) of futures positions in consecutive months. The average of the prices for the futures contracts bought (or sold) is the price level of the hedge. A six-month strip, for example, consists of an equal number of futures contracts for each of six consecutive contract months. Also known as a calendar strip.

Sub-Metering	The term often used when a property owner installs a separate meter to monitor the consumption of a utility such as water, gas or electricity.

Substation	Facility equipment that switches, changes, or regulates electric voltage. An electric power station which serves as a control and transfer of power flow, transform voltage levels, and serve as delivery points to industrial customers.

Sulfur	An element that is present in some oil and gas as an impurity in the form of its various compounds.

Supply Agreement	A contract between a supplier and the customer to supply electricity at an agreed tariff for an agreed duration of supply contracts are of 12, 18 or 24-month duration but longer and shorter are possible.

Support	In technical analysis, a price area where new buying is likely to come in and stem any decline.

Swap	A custom-tailored, individually negotiated transaction designed to manage financial risk, usually over a period of one to 12 years. Swaps can be conducted directly by two counterparties, or through a third party such as a bank or brokerage house. The writer of the swap, such as a bank or brokerage house, may elect to assume the risk itself, or manage its own market exposure on an exchange. Swap transactions include interest rate swaps, currency swaps, and price swaps for commodities, including energy and metals. In a typical commodity or price swap, parties exchange payments based on changes in the price of a commodity or a market index, while fixing the price they effectively pay for the physical commodity. The transaction enables each party to manage exposure to commodity prices or index values. Settlements are usually made in cash.

Synthetic Futures	A position created by combining call and put options. A synthetic long futures position is created by combining a long call option and a short put option for the same expiration date and the same strike price. A synthetic short futures position is created by combining a long put and a short call with the same expiration date and the same strike price.

System Buy Price (SBP)	The price paid in the Balancing Mechanism by a party that requires more energy to meet its contractual commitments. Prices are often volatile and very high.

System Sell Price (SSP)	The price paid in the Balancing Mechanism by a party that has produced more electricity than it had customers to buy. Prices are very volatile and often negative, meaning that a payment would need to be made to dispose of the unwanted electricity produced.

Tank Train	A procedure in the rail shipment of crude oil, refined products, and other liquids developed by General American Transportation (GATX). "Tank Train" tank cars are interconnected, which permits loading and unloading of the entire train of cars from one connection.

Tariff	A schedule of rates or charges permitted a common carrier or utility; pipeline tariffs are the charges made by pipelines for transporting crude oil, refined products, or natural gas from an origin to a destination.

Technical Analysis	An approach to forecasting commodity prices which examines patterns of price change, rates of change, and changes in trading volume and open interest, without regard to underlying fundamental market conditions.

Terawatt-hour (TWh)	The equivalent to one thousand gigawatt hours (GWh).

The Carbon Trust	The Carbon Trust is an independent, not-for-profit company, which was created by the UK government. The Carbon Trust helps business and the public sector cut carbon emissions, and supports the development of low carbon technologies.

Theoretical Value	An option's value generated by a mathematical model given certain prior assumptions about the term of the option, the characteristics of the underlying futures contract, and prevailing interest rates.

Therm	This is a unit of measurement for gas. 1 therm is equal to 29.3071kWh.

Theta	The sensitivity of an option's value to a change in the amount of time to expiration.

Throughput	1) A term used to describe the total volume of raw materials that are processed by a plant such as an oil refinery in a given period. 2) The total volume of crude oil and refined products that are handled by a tank farm, pipeline, or terminal loading facility.

Tick	A minimum change in price, up or down.

Time Spread	The selling of a nearby option and buying of a more deferred option with the same strike price.

Time Value	Part of the options premium which reflects the excess over the intrinsic value, or the entire premium if there is no intrinsic value. At given price levels, the option's time value will decline until expiration. It is this decrease in time value that makes options a wasting asset.

Top-up Load	This is priced like a normal contract with fixed price all inclusive rate at agreed signing.

Trade Association	An association of firms that operate in a specific industry.

Trade House	A firm which deals in the physical commodity.

Trade Limit Monitoring System	The system through which clearing members set and monitor limits on their customers' NYMEX ACCESS accounts, including maximum order size, maximum position size per session, session trading volume, and session trading losses.

Trader Workstation	A NYMEX ACCESS workstation through which NYMEX ACCESS orders are placed.

Trading	Buying and selling.

Trading Volume	The number of contracts that change hands during a specified period of time.

Transco	This is a company who own and run the UK gas pipe line. All gas shippers pay a charge for the transportation of gas. The cost of transportation of gas will vary depending on your location.

Transformer	An electrical device for changing the voltage of alternating current.

Transmission	The transfer of electricity at high voltage from the power stations across the UK through wires on pylons to points where it can be distributed to users. This is known as the Grid System and is owned and operated by the National Grid Company (NGC).

Transmission Company	Company that transports gas for resale on its own behalf or transports gas for others. Also known as a pipeline company.

Trend	The general direction of price movement.

TRIAD	Used for the calculation of TUoS Charges, the TRIAD is calculated by looking at the three maximum demand points (in kW) of the supply at half hourly time periods, and then averaging the total. The figures used are usually selected from winter months, and at peak times, as these periods are set to reflect the point at which the highest demand occurs on the National Grid.

Triangular Flags	Chart patterns of the price movement of a commodity when the market consolidates sideways. The price patterns are used by technical analysts to try to recognize changes in a price trend.

Troy Ounce	A unit weight, equal to about 1.1 avoirdupois ounce. The troy ounce is the traditional unit weight for precious metals, believed to be named after a weight used as the annual fair at Troyes in France in the Middle Ages. 1 ounce troy = 480 grains = 31.04 grams 1,000 grams = 1 kilogram = 32.15 ounces troy 1,000 kilograms = 1 metric ton = 32,150 ounces troy

TUoS (Transmission Use of System)	The charges incurred for transmitting electricity across the National Grid network from the source of generation to the network of the local distribution company. The level of these charges is usually calculated by applying a rate charge to the TRIAD demand level.

UK Kyoto Target	In 1997, representatives from over 170 nations met in Kyoto, Japan to put together a new global treaty - the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) - laying down legally binding reductions in greenhouse gas emissions throughout developed countries.

Underlying	The stock, commodity, futures contract, or cash index against which the futures or options contract is valued.

Variation Margin	Payment made on a daily or intraday basis by a clearing member to the clearinghouse to cover losses created by adverse price movement in positions carried by the clearing member, calculated separately for customer and proprietary positions.

Vega	The sensitivity of an option's value to a change in volatility.

Viscosity	A method of measuring a given liquid's resistance to flow, usually decreasing with increasing temperatures. Material with higher viscosity is more resistant to flow.

Volatility	The market's price range and movement within that range. The direction of the price move, whether up or down, is not relevant. Historic volatility indicates how much prices have changed in the past and is derived by using daily settlement prices for futures. Implied volatility measures how much the market thinks prices will change in the future, and is obtained from daily settlement prices for options.

Voltage Transformer	A device that reduces (or increases) the supply voltage for example a 11000/415 Volt transformer would convert volt supply to 415 volt supply.

Warrant	A document of title issued by a warehouse or depository for a specific lot of stored metal that meets the specifications of the corresponding Exchange metals futures contract. Metal that is "on warrant" is eligible for delivery against a short position on the Exchange.

West Texas Intermediate	A grade of crude oil deliverable against the New York Mercantile Exchange light, sweet crude oil contract. Nominally, the benchmark crude of the U.S. oil industry.

Wet Barrel	A physical barrel of crude oil or refined product as opposed to a "paper barrel."

Wet Gas	Natural gas containing condensable hydrocarbons.

Writer	The seller of an option. Also known as the grantor of the option.

Yield	1) A measure of the annual return on an investment expressed as a percentage. 2) The proportion of heavy or light products which can be derived from a given barrel of crude oil.

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Glossary V2.0

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