Average Price per Barrel
Average Price per Barrel refers to the price that a company pays for the oil that it uses in its operations. Companies that use oil as a major input for their business often use investment tools to hedge against the price of oil. By investing in oil (often through futures contracts), companies can lock in the price they pay for oil regardless of how prices change in the spot markets. Average price per barrel is, as it implies, the total amount of money a company spent on oil divided by the total number of barrels the oil came in. As a metric, average price per barrel is used to determine how well a company has hedged against the price of oil for a specific period.