RBOB Gasoline: Understanding One of the Most Important Commodities in the World

The minimum price tick for RBOB is 0.0001, equivalent to a movement of $4.20 for one contract. Prices for RBOB gasoline futures logically have a high degree of correlation with crude oil since gasoline is distilled from crude. Thus, some of the global supply and demand factors for crude oil also apply to RBOB. RBOB gasoline futures are listed on the Chicago Mercantile Exchange (CME) under the futures symbol RB. In investing, RBOB gas is the benchmark for gasoline on the futures market.

What It Means for Individual Investors

Reformulated Blendstock for Oxygenate Blending (RBOB) gasoline is a fuel product made from refined crude oil. RBOB gasoline often goes by the names gasoline, petro gasoline or petrol. The map above illustrates a color-coded patchwork of different blends of reformulated gasoline, each one a specific cocktail for the climate. This map predates the complete phase-out of MTBE, but it still accurately depicts the wide variety of reformulation required at the local level. This means that your single-malt scotch mixes well with club soda.

Enter Stage Left – Ethanol

Weak economic conditions could cause gasoline and many other commodity prices to suffer. Shares of oil companies can also react to other factors including the performance of management and the stock market in general. The most prolific uses of RBOB gasoline is as fuel for various products such as cars, lawn mowers, generators, pressure washers, and many other common household appliances. RBOB gas contracts are traded on the Chicago Mercantile Exchange.

You should consider whether you can afford to take the high risk of losing your money. The RBOB gasoline futures contract is settled by physical delivery. This means most investors want to liquidate positions prior to the expiration of the contracts. If a position is not liquidated, the holder of a long contract might be responsible for taking delivery of 42,000 gallons of gasoline. It is safe to say that most investors do not want to take physical delivery of that much gas. Thus, investors must be aware of the different deadlines for futures contracts and offset any positions before the risk of delivery comes into play.

However, after the invention of the automobile in 1892, gasoline became the main source of fuel for cars and light-duty vehicles. This makes gasoline one of the most important and well-known commodities in the world. Edwin Drake, the first American to drill for oil, discovered gasoline by accident when he was distilling oil to make kerosene for heating. Drake considered gasoline a useless byproduct of the distillation process and discarded it. Barchart Plus Members have 10 downloads per day, while Barchart Premier Members may download up to 250 .csv files per day. This tool will download a .csv file for the View being displayed.

1. The costs of operating refineries and the productivity of those refineries can have a major effect on gasoline prices.
2. Other production/refining methods include polymerization, alkylation, and isomerization.
3. Other compounds, such as sulfur and benzene, still made it past the catalytic converter and into the air.
4. If it’s mixed with gasoline at the refinery, every pipe and tank that it passes through will be subjected to higher levels of corrosion.
5. Crude oil and gasoline prices retreated Friday, with crude posting a 14-month nearest-futures low and gasoline dropping to a 2-3/4 year nearest-futures low.
6. Gasoline options contracts expire three business days prior to the expiration of the underlying futures contract.

That means you only need 12% of the total investment down to buy the contract on margin. RBOB’s price is most sensitive to supply-and-demand changes for the commodity. For example, hurricane weather in the Gulf of Mexico can have a big impact on RBOB’s price because it affects the supply produced by the many U.S. refineries in the gulf. Drivers use more gas in the summer, which also affects the price because of the increase in demand. Lawrence Pines is a Princeton University graduate with more than 25 years of experience as an equity and foreign exchange options trader for multinational banks and proprietary trading groups.

Global Demand Picture

The page will always show prices from the latest session of the market. The refiner must remove light molecular weight, high RVP components, which changes the RFG’s distillation characteristics. This requires the removal of some heavy molecular weight and high boiling point components as well. Trading in gasoline is a way to express a bullish view on crude oil. If the global economy grows at a a to z manuals customer reviews strong rate, then eventually there may be an insufficient supply of fossil fuels available to meet demand.

First, transportation of this fuel can be expensive, as can the refining process to turn crude into gasoline. The prices of RBOB are directly correlated with crude oil, meaning that they will exhibit significant volatility that may be an attractive trait for many traders. Secondly, investments in gasoline can also be used to hedge against inflation, or simply to make a play on our global addiction to fossil fuels. Gasoline is a vital part of our everyday lives, and there is a strict need to consume no matter what economic conditions may be, making it an attractive investment during all kinds of markets. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs.

At expiration, traders must either accept physical delivery of gasoline or roll their positions forward to the next trading month. The contract trades globally on the CME Globex electronic trading platform. RBOB is a distillation of hydrocarbons from about alfa forex альфа форекс crude oil that is used to produce gasoline fuel. After it is distilled from petroleum, RBOB is blended with ethanol to produce reformulated gasoline. Methanol, derived from natural gas, and isobutylene from the butane obtained in the crude oil refining process, are reacted together to form MTBE.

Ethanol affects nitrogen oxides (NOx) and toxic emissions as well as Volatile Organic Compounds (VOCs). For RFG (Reformulated Gasoline) to meet VOC requirements, the finished blend must have a low Reed Vapor Pressure (RVP), generally less than 7.0 psi during the summer. Demand for distillates such as gasoline is driving higher global demand for crude oil. As emerging market economies grow, people will purchase more cars and other forms Acciones paypal of transportation.

RBOB is Reformulated Blendstock for Oxygenated Blending, a mix of petrochemicals intended to be mixed with ethanol to produce finished motor gasoline. Increasing demand for gasoline in Asia, Latin America and the Middle East often outpaces supply from those regions. Demand for gasoline has been steadily declining in Europe and the United States.

One of the earliest biotechnologies employed by man, the fermentation of sugar into ethanol, has been with us since prehistory. The alcohol in wine, beer, and that fine single-malt scotch is the same ethanol that is blended into our gasoline. Lawsuits continued, and oil companies asked for transition assistance in the form of $2 billion and liability protection while they phased out MTBE. That request did not survive congressional review, and the lack of MTBE liability protection quickly brought an end to its use. The cold air allowed engines to run cooler, creating more unburned hydrocarbons.