SUBSCRIBER NOTE: Platts clarifies Cash BFOE partial settlement mechanism in MOC

S&P Global Platts wishes to remind subscribers that bids and offers for Cash BFOE partials published during the Platts Market on Close assessment process reflect BFOE transactions of 100,000 barrels. If a single buyer and a single seller transact six partials of 100,000 barrels with each other, the transactions converge into one physical Cash BFOE cargo of 600,000 barrels.

If, after all convergences have been completed, any two counterparts have outstanding partials that do not amount to a 600,000-barrel cargo, those partials are to be financially settled using the Platts assessment published on the final working day of the calendar month for the relevant contract month (M1, which is calendar month M+2), unless specified otherwise by Platts.

For example, if a single buyer and a single seller trade six July partials with each other in the Platts MOC process prior to 4:30 pm London time on May 31, 2017, the partials converge into a full physical cargo of 600,000 barrels for loading any day in the month of July, according to standard nomination procedures as detailed in the SUKO-90 contract and explained on the Platts website at the following location:

http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpec s/Crude-oil-methodology.pdf

However, in the same example, if two counterparties trade five July partials, then the financial settlement of the 500,000 barrels is based on the Platts assessment for July Cash BFOE published on May 31, 2017.

This clarification of the Cash BFOE partial settlement mechanism was first published on April 30, 2015. The original subscriber note can be found at the following location:

https://www.platts.com/subscriber-notes-details/10929814

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