News in the refining world is often dominated by talk of spreads. You've got the Brent-WTI spread and the crack spread. Though many investors think the former is what matters most, it's actually the latter that provides a direct connection to the profitability of any given refiner. Understanding the crack spread is crucial if you are thinking of buying a small master limited partnership refiner like CVR Refining (NYSE:CVRR) or Northern Tier Energy (UNKNOWN:NTI.DL).
In this video, Fool.com contributor Aimee Duffy talks to Tyler Crowe about what crack spreads are, how to calculate them, and how they can indicate a refiner's profitability.
Aimee Duffy, Tyler Crowe, and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.