The ICE contract on 100 tonnes of low sulphur gasoil delivered in northwest Europe, the international diesel benchmark quoted in dollars per metric tonne.
Gasoil is Europe's distillate benchmark and the counterpart to US heating-oil. The quoting unit is the main difference: dollars per metric tonne rather than dollars per gallon, with roughly 7.45 barrels per tonne for distillate.
Traders arbitrage the two continuously, and the transatlantic diesel spread drives cargo flows. When European gasoil is expensive relative to New York ULSD, cargoes load on the US Gulf Coast and sail east.
Example: gasoil at $760 per tonne is 760 / 7.45 = $102.01 a barrel, or $2.43 a gallon. Against ULSD at $2.60 the US product is 17 cents a gallon dearer, which comfortably exceeds freight and pulls barrels westward instead.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.
Educational only, not advice. Spotted an error? Post in Site Feedback.