Trigger Pricing Worries Oil Sellers to China in Volatile Market
- Teapots placing large orders to take advantage of price dips
- Sellers remain cautious after previous transaction mishaps
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China’s private oil refiners are making increasingly large bets on capturing a bottom in crude prices, raising concern among fellow traders about the risk of the market moving against them.
The companies, known as teapots, like to pay for their monthly crude supply using a method known as trigger pricing. That means they buy oil in batches over the month, paying the prevailing price at the time, instead of the industry norm of using an average price over the whole period.