Business and Personal Finance Dictionary

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• REVERSE CRACK
  
  Is the sale of crude oil against the purchase of the refined products. In futures trading, it is the simultaneous sale of crude oil futures versus the purchase of heating oil and gasoline futures. The spread differentials reflect the potential refining margins, profitability, or loss. Here, the spread implies that the cost of the raw commodity input, crude oil, is relatively rich or expensive to its refined products. In fact, it suggests that it is economic to buy the products and sell the input. If this spread relationship persists, then refiners may reduce or cease production because it would be at a loss. Compare to Crack Spread.
  
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