Price Reporting Agencies and Assessed Prices

Crude oil grades, jet fuel, and thousands of other physical commodities rarely trade on a central exchange the way stocks do. Instead, private firms called price reporting agencies (PRAs), Platts, Argus, and ICIS being the best known, survey market participants each day, collect bids, offers, and completed trades, and publish an assessed price: their best judgment of where a standard-sized deal would have cleared at a specific time window. Most physical supply contracts, and many derivatives, are written to settle against these assessments rather than against any single trade.

Worked example

A refiner sells a cargo of jet fuel under a contract priced at "Platts jet CIF NWE minus $5/barrel." No exchange price exists for that specific grade and delivery point, so both sides simply wait for that day's Platts assessment window to close, take the published number, and subtract $5, the assessed price, not a negotiated spot trade, is what actually settles the deal.

This matters well beyond the two counterparties involved, because thousands of unrelated contracts around the world reference the same daily assessment. A small methodology change, widening the time window, adding a new grade, changing the minimum deal size counted, can shift the published number and, with it, the settlement value of contracts nobody involved in that day's survey ever knew about.