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 (CVRR) or Northern Tier Energy (NYSE: NTI).
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.