Crack Spread
The market's benchmark measure of refining profitability: the theoretical margin from "cracking" a barrel of crude oil into refined products, quoted in dollars per barrel. The common "3-2-1" crack spread assumes three barrels of crude yield two of gasoline and one of distillate, capturing a typical refinery's output mix. It is a real-time, publicly quoted proxy for refiner margins that trades on futures markets, so it moves ahead of reported results and is the number analysts watch to anticipate a refining quarter. A widening crack spread signals strengthening refiner economics; a collapsing one warns of margin compression.
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