Trading on ICE Futures Europe and CME, the contract represents a legally binding agreement to buy or sell a specified quantity of RBOB Gasoline on a future date, at a pre-agreed price. A good RBOB Gasoline futures strategy would include technical and fundamental analyses for market timing and risk management techniques. Start your research with reviews of these regulated brokers available in that offer a variety of options for trading and speculating on the price of gas and other commodities. Futures are a derivative instrument through which traders make leveraged bets on commodity prices.
Derivatives trading involves risk of loss and past financial results are not necessarily indicative of future performance. Any hypothetical examples given are exactly that and no representation is being made that any person will or is likely to achieve profits or losses based on those examples. The All Futures page lists all open contracts for the commodity you’ve selected. Intraday futures prices are delayed 10 minutes, per exchange rules, and are listed in CST. Overnight (Globex) prices are shown on the page through to 7pm CT, after which time it will list only trading activity for the next day.
- Such disruptions or instability would likely be bullish for gasoline prices.
- RBOB is Reformulated Blendstock for Oxygenated Blending, a mix of petrochemicals intended to be mixed with ethanol to produce finished motor gasoline.
- It is safe to say that most investors do not want to take physical delivery of that much gas.
- Methanol, derived from natural gas, and isobutylene from the butane obtained in the crude oil refining process, are reacted together to form MTBE.
RBOB is an acronym for “Reformulated Gasoline Blendstock for Oxygen Blending”. This type of gasoline is used as the benchmark for gasoline trading on the Chicago Mercantile Exchange. The term “reformulated” describes gasoline that does not have any MTBE “Methyl tert-butyl ether”. 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. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives.
And for RBOB, a 10-year December-to-May rally projects to a high print of $3.14/gal. The third candidate for a head-and-shoulders bottom occurred in RBOB on Dec. 13 when prices briefly slumped to a multi-year low of $1.9671/gal. Similarly, the Dec. 13 low print of $67.71/bbl for WTI is the prime candidate for a seasonal cycle low for domestic crude. It also appears to be the head of the aforementioned “massive potential head and shoulders bottom.”
Technical Trends Point to 2024 Rally for Crude, RBOB — OPIS Analysis
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. RBOB is Reformulated Blendstock for Oxygenated Blending, a mix of petrochemicals intended to be mixed with ethanol to produce finished motor gasoline.
The refiner, just like the producer and consumer is incentivised by profits. Fortunately, traders can evaluate refiners profits by analyzing the margins they produce. The profit margins a petroleum refiner sees is referred to as the crack spread. One of the most well-known refinings crack spreads is the RBOB/Brent crack spread. Another very actively traded crude oil is WTI (West Texas Intermediate). This is another light sweet crude oil that is used in the refining process to create gasoline.
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The second is the difference between the cost to generate gasoline and the price where gasoline can be sold is the profit margin. The cost to generate gasoline is the value of crude oil plus the distillation process. 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. You should consider whether you can afford to take the high risk of losing your money. The price for the RBOB gasoline futures contract is quoted in U.S. dollars and cents.
If these futures contracts do break out, history is suggestive of some serious price escalation. If the $72.29/bbl Brent number indeed proves to be a seasonal bottom, 10 years of average December-to-May movement would target a rally all the way to $101.65/bbl. RBOB Gasoline futures are futures contracts whose underlying asset is a specified quantity and quality of RBOB Gasoline. Such contracts represent a legally binding agreement to receive or deliver the specified quantity of RBOB Gasoline on a future date, at a pre-agreed price. I do believe that oil production globally has peaked at 85 million barrels.
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The lightest components, such as gasoline rise to the top while the heaviest components, such as residual oil, fall to the bottom. Light components include gasoline, which is condensed from a gas back into a liquid. Reformulated blendstock for oxygenate blending (RBOB) is a grade of gasoline used in U.S. futures contracts traded on commodity exchanges as a way to speculate on the price of oil. The weekly chart of the RBOB Brent crack spread shows that at times the crack was as high as $28 dollars per barrel and as low as -$5.5 per barrel. When the crack spread is negative there is no incentive for refiners to purchase and refine Brent oil.
This means that storage tanks, delivery trucks, and refining plants present the most dangerous threats of the chemical being released into the environment. Aside from its health hazards, gasoline has also long been under the gun for contributing to greenhouse gases and global climate change. You can get access to trading them through most brokerage firms and futures trading portals. There isn’t an easy way to invest directly in RBOB gas with stocks or bonds, but you can invest in energy sector stocks and bonds affected by the same economic forces. There are also options for energy-related ETFs focused on oil and natural gas. Whereas buying an RBOB future could cost thousands, shares of ETFs can cost less than $20.
Information contained herein was obtained from sources believed to be reliable, but is not guaranteed as to its accuracy. End-of-Day prices are updated at 8pm CST each evening, and includes the previous session volume and open interest information. Now let’s look at the import volume for the CBOB for the https://traderoom.info/ rest of PADD 1 that does not require the reformulation. 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.
If prices decline, traders must deposit additional margin in order to maintain their positions. Past performance of any security, futures, option, or strategy is not indicative of future success. Consider your personal financial situation, including your risk tolerance, before investing. Octane measures the ability of gasoline to withstand common “engine knock”. That is why gas stations have 3 grades of fuel including regular, mid-grade, and premium, with octane and price increasing with each grade.
The most important and direct factor is the price of crude oil because RBOB Gasoline is gotten from crude oil. By extension, any factors that affect crude oil prices will also affect gasoline prices. Such factors include geopolitical tension, climate change policies, OPEC announcements, and so swissquote review on. Another important factor is the seasonal changes in gasoline demand — gasoline demand tends to decline during the winter months. There are two components to the profit margin that a refiner can achieve. The first is the difference between the price of crude oil and the price of gasoline.
At expiration, traders must either accept physical delivery of gasoline or roll their positions forward to the next trading month. In investing, RBOB gas is the benchmark for gasoline on the futures market. Minimum contracts are equal to 42,000 gallons (1,000 barrels) and trade for the value per gallon. That means you need to multiply the quoted price by 42,000 to know what the contract cost will be.