What is physical premium / discount?Physical Premium / Discount
How much a physical deal is priced above (premium) or below (discount) the benchmark, reflecting quality, delivery location and local supply and demand; not the same as a futures curve's contango or backwardation.
Learn “physical premium / discount” in an animated lesson
- Physical CommoditiesBenchmark Prices and Physical Premiums
It's all called "crude oil", but oil from different fields and ports sells at different prices. Physical price = benchmark + quality premium/discount + freight.
- Physical CommoditiesWhat Are Commodities?
Crude oil, gold, copper, wheat… standardized physical goods traded in bulk. They're the raw materials of the world economy.
Related terms
See how “physical premium / discount” works for yourself with an animation you can drag and play.
Go to “Benchmark Prices and Physical Premiums”