Internal combustion engines, like those found in automobiles, burn fuel in controlled processes. The higher the octane rating, the higher the compression rate, with a more efficient fuel capable of a higher output than those with a lower octane rating. Say you want to buy an RBOB contract when the price is around $2.30 per gallon. 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.
Understand the mechanics of RBOB Gasoline futures contracts, including the legally binding agreement, physical delivery, and the settlement process through commodity exchanges. You trade the contract through a futures broker that will grant you access to the exchange where RBOB Gasoline futures contracts are traded and also help to clear your trades. So, register with a futures broker and fund your account — you only need to have a little above the required margin to start trading. For the full contract, the margin is $7,700 for the December 2022 contract.
One full contract unit of RBOB Gasoline futures is equivalent to 42,000 gallons, and the price quotation is in US dollars and cents per gallon. Settlement is by physical delivery, and trading terminates on the last business day of the month prior to the contract month. In performing fundamental analysis, you study the factors that affect RBOB Gasoline, including crude oil prices, climate change policies, and so on. With technical analysis, you look at an RBOB Gasoline futures chart to determine the best entry point to purchase a contract so you don’t buy too high and risk a huge loss.
- Whereas buying an RBOB future could cost thousands, shares of ETFs can cost less than $20.
- Securities products and services are offered through StoneX Securities Inc., a registered broker-dealer and member FINRA/SIPC.
- The value of a CFD is the difference between the price of gasoline at the time of purchase and the current price.
- Electric cars and alternative biofuels are early-stage but are growing threats to the gasoline industry.
- This also means that fuel ethanol attracts water, making it corrosive to the steel used in pipelines and plumbing at oil refineries.
- Much of the U.S. gasoline supply comes from refineries in the Gulf Coast region.
Zimmerman puts extra weight on weekly closes so Thursday’s and Friday’s action could provide confirmation. He notes that the formation of bottoms hasn’t been “squirrely” with crude oil benchmarks essentially “basing” since the fourth quarter of 2023 commenced. Only an event such as peace in Ukraine might be capable of altering the symmetry. You can use the RBOB Gasoline futures strategy to speculate on gasoline price fluctuations, diversify your portfolio into the energy sector, or hedge your exposure in the market. Based on the TradingView chart for RBOB Gasoline futures (RB), the lowest price the RBOB Gasoline futures contract has ever fallen to was $0.3105 per gallon, which happened in July 1986. Based on the TradingView chart for RBOB Gasoline futures (RB), the highest price the RBOB Gasoline futures contract has ever reached was $4.3260 per gallon.
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But now, the $72.29/bbl number is regarded as the head of what he terms a “massive potential head-and-shoulders bottom.” RBOB Gasoline futures were trading at $2.2005 https://traderoom.info/ per gallon, as of December 14, 2022. From the chart above, you can see that the RBOB Gasoline futures tend to perform better between February and the end of June.
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Options are also a derivative instrument that employ leverage to trade in commodities. This material does not constitute an individualized recommendation, or take into account the particular trading objectives, financial situations, or needs of individual customers. Contact designated personnel from the FCM Division of StoneX Financial Inc. for specific trading advice to meet your trading preferences or goals. All references to and discussion of OTC products or swaps are made solely on behalf of SXM, a member of the NFA and provisionally registered with the CFTC as a swap dealer.
As a result, RBOB, which does not contain MTBE, has quickly grown in popularity with futures traders, and it has also become the new benchmark gasoline contract. Crude oil and gasoline prices on Thursday gave up an early advance and sold off, with crude falling to a 1-week low and gasoline falling to a 2-week low. Crude prices retreated after Al Jazeera reported that Israel had agreed to a ceasefire. However, Bloomberg reported that there was not yet a ceasefire agreement but that negotiations are advancing to pause the Israel-Hamas conflict and free civilian hostages captured by Hamas. RBOB is more expensive to refine—more energy and more effort are required to pull some of the additional hydrocarbons out of the fuel.
An ongoing trade battle between the United States and China has magnified the impact of tariffs… You can use the CME Group website or the Nasdaq website to find the current price of a gallon of RBOB gas.
Role of Refineries
There are three steps in the refining process that include separation, conversion, and treatment. There is an additional process called hydro treating that eliminates sulfur from the gasoline product. Brent crude oil fundamental analysis approach is one of several types of light sweet crude oil that serves as the global benchmark for crude oil. Brent is described as light because of its relatively low density, and sweet because of its low sulfur content.
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The minimum price fluctuation is one-hundredth of a cent ($0.0001) per gallon. Barchart Plus Members have 10 downloads per day, while Barchart Premier Members may download up to 250 .csv files per day. Also unique to Barchart, Flipcharts allow you to scroll through all the symbols on the table in a chart view.
Producing reformulated gasoline using ethanol presents problems for refiners. 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. Long ago, in the bad old days when our cars were big, fuel was cheap, and we actually put lead in the gasoline, there was conventional gasoline.
The term crack spread describes the difference between the value of gasoline and crude oil. This activity is known as the downstream process of oil and gas companies. In the refining process, crude oil is heated and introduced into the distillation tower. Liquids and gases are separated into components by weight and boiling point.
The margins on calendar spreads are lower because the two contracts have a high degree of correlation and generally move in the same direction. However, one contract might move more than the other due to market conditions. RBOB gasoline futures are listed on the Chicago Mercantile Exchange (CME) under the futures symbol RB.
