|
The
purpose of this question and answer page is to reiterate OPIS West
Coast pricing methodology in the context of evolving market conditions
on the U.S. West Coast.
Market
conditions are evolving rapidly on the West Coast and across the
nation. More West Coast products are being traded based on cash
differentials (basis spreads) to the NYMEX futures markets. These
are taking place in concert with outright deals with absolute
values.
In addition, OPIS has just introduced
its exclusive West Coast Indicator, an interactive desktop pricing
tool that allows you to have full day spot price discovery for
major products traded in Los Angeles, San Francisco, and the Pacific
Northwest.
In the context of these and other
changes, our West Coast OPIS editors wanted to review the methodology
employed each day to arrive at our daily assessment of spot prices.
Some of you asked about this in our surveys.
Finally, more and more EFP (Exchange
of Futures for Physical) deals are being reported on the West
Coast. Some of you have asked how we handle these transactions
as part of our daily coverage.
Below we provide the answers to
some of your questions:
Does OPIS
publish prompt numbers?
OPIS does publish "prompt"
ranges, which are trades that reflect "any month / buyers
option" transactions. "Buyers option" gives the
buyer the choice of taking delivery in any of the four cycles
in throughout the month. In Los Angeles, OPIS identifies the prompt
Kinder Morgan cycle for timing clarity but ranges are buyer option/any
month lifting.
OPIS works with the Kinder Morgan
Pipeline to determine the timing of the various cycles throughout
the month. Typically, each month has four pumping cycles. However,
once a cycle has been frozen by KM, it is termed "inside
the freeze" and deals reported inside this freeze are excluded
from daily ranges, although they may be noted in the commentary.
What specific
pipeline delivery points does OPIS use?
For the Los Angeles market, OPIS
follows the Kinder Morgan West Line, and in the Bay area the OPIS
assessment is for the Kinder Morgan Zero Line. In the Pacific
Northwest, prices are FOB Portland - Olympic Pipeline and jet
fuel is FOB Seattle barge.
What about
'paper' deals?
OPIS spot price ranges do not reflect
paper transaction for current month or prompt deals. However,
in Los Angeles we do offer an outer month indicator showing the
value of forward paper deals.
How does OPIS
use and calculate EFP deals in its pricing?
EFP deals are the same as an absolute
fixed price deal where there is physical delivery of the product.
We will calculate the confirmed differential against the NYMEX
settlement price for the appropriate month to arrive at an absolute
cash deal price. That number then becomes a part of the OPIS daily
range.
Does OPIS
include every deal that we discuss with the market?
OPIS West Coast editors make a concerted
effort to thoroughly and completely canvass the market and gain
input from as many market participants as possible. However, we
can never guarantee that we see all transactions. We have always
reserved the right to exclude certain deals from our daily range
based on evaluations by our experienced staff of editors.
What is the
OPIS window and deadline for daily deals?
OPIS West Coast editors start canvassing
the market when it opens and generally post the first deals or
market indicators on the OPIS Spot Ticker by 11:30 eastern time
or 8:30 pacific time. Our deadline for confirming deals is currently
5:30 pm eastern time or 2:30 pacific time.
Some discussions have been held
about extending our deadline until 6:30 pm eastern time or 3:30
pacific time. To date, the majority of our customers say this
is not necessary.
We will continue to monitor this
need with our customers and make the change if necessary to more
accurately reflect the market.
How are the
OPIS West Coast Indicator prices factored into the range?
The purpose of the OPIS West Coast
Indicator is to give some guidance as to market direction and
values. The Indicator may reflect "implied" numbers
during the day and not actual deals, although actual deals are
posted when they occur. Only confirmed physical deals are incorporated
into the final OPIS West Coast numbers, so it is possible that
the OPIS West Coast Indicator during the trading day may show
a price that ends up NOT being in the final set of ranges.
|
