What is the RBOB Brent Crack Spread and how is it Use in Energy Trading?

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. If prices decline, traders must deposit additional margin https://traderoom.info/ in order to maintain their positions. In this guide to trading RBOB gasoline, we’ll explain how and where you can trade this popular commodity. We also list regulated brokers that are available in your country. Crude also rose after OPEC+ signaled that its crude production cuts would continue throughout the first quarter.

  1. This 2016 study from AAA (PDF) goes into detail about how Top-Tier detergent gasoline can make a real difference in quality without impacting your wallet to a significant degree.
  2. Increasing demand for gasoline in Asia, Latin America and the Middle East often outpaces supply from those regions.
  3. This, combined with the way cold air tends to trap warmer exhaust, created hazier and smoggier days.
  4. Additionally, RBOB gas prices move before the price at the pump moves.
  5. However, after the invention of the automobile in 1892, gasoline became the main source of fuel for cars and light-duty vehicles.

It gets its name from being a conventional grade of gasoline (“C”) as opposed to a reformulated grade (such as RBOB) that has tighter environmental specifications. CBOB is a “BOB” (before oxygenate blending) because it is formulated for subsequent blending with 10% ethanol to form the final gasoline blend that is marketed to end users. Seasonal pollution requirements for gasoline can also lead to disparities in pricing as can weather-related disruptions to refinery operations. These industrial facilities separate crude oil, which consists of different hydrocarbons, into smaller component hydrocarbons or fractions. 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.

The value of a CFD is the difference between the price of gasoline at the time of purchase and the current price. CFD traders, therefore, have direct economic exposure to the commodity. Due to gasoline’s widespread use, it has come under fire for numerous health and environmental concerns over the last few decades. From a health standpoint, the fuel stores numerous carcinogenic chemicals, and can be a danger to the general public if a leak were ever to occur. 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.

The boiling process produces gasoline as well as other products including kerosene and diesel fuel. As emerging market economies grow, people will purchase more cars and other forms of transportation. This supply/demand imbalance should cause gasoline prices to rise.

Gasoline Options

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).

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. Gasbuddy ranks Fridays as the busiest day of the week at our nation’s gas stations, with 5 p.m.

Alternatives to RBOB Gas

Options buyers pay a price known as a premium to purchase contracts. An options bet succeeds only if the price of gasoline futures rises above the strike price by an amount greater than the premium paid for the contract. Methanol, derived from natural gas, and isobutylene from the butane obtained in the crude oil refining process, are reacted together to form MTBE. Refiners can add it directly into the blending stream as gasoline leaves the refinery. But MTBE, while not classified as a human carcinogen, is suspected to be a potential human carcinogen at high doses.

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Mandated by the EPA, ethanol is the leading oxygenate added to gasoline in the United States. The federal government supports the ethanol industry through subsidies given image processing in node js to farmers and manufacturers. Futures contracts aren’t as popular among individual investors as stocks and bonds because they are generally harder to analyze and trade.


RBOB Gasoline futures are traded on the Chicago Mercantile Exchange, with prices quoted in U.S. dollars and cents per gallon under the symbol RB. A single contract represents 42,000 gallons with a minimum fluctuation of $0.0001 per gallon. Listed contracts conduct trading throughout the next 36 consecutive months. 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. Both Exxon and Mobil have “more than 11,000” branded gas stations nationwide, so it’s a safe bet that you’ll come across one in your travels.

While you’re there, you can thank Mobil for saving you time, as it was the first gasoline retailer to introduce payment at the pump. The Exxon Mobil rewards program will allow you to save 3 to 6 cents per gallon as you accrue points from in-store purchases. Further, the company’s Rewards Plus app allows you to pay for gas purchases from inside your car and track your savings. Refineries heat crude oil at temperatures of several hundred degrees and place the boiling liquid into distillation columns called stills.

Futures involve leverage, which can sink a whole account in days with relatively small moves. Frequent Chevron shoppers might consider becoming a Techron Advantage credit cardholder. Fuel quality is just one of factors in determining the best gas stations.

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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. The RBOB gasoline futures contract is settled by physical delivery.

Gasoline options contracts expire three business days prior to the expiration of the underlying futures contract. 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. Once the markets have closed, the Last Price will show an ‘s’ after the price, indicating the price has settled for the day. The page will always show prices from the latest session of the market.

The EPA drafted plans in 2000 to phase out the use of MTBE by 2006. You can use the CME Group website or the Nasdaq website to find the current price of a gallon of RBOB gas. Wearing the source of its fossil fuels proudly as a badge, Sinclair has the highest customer satisfaction ranking of any entry on our list. Operating with just over 1,500 locations in 29 states, you won’t find Sinclair’s fabled dinosaur logo everywhere, but when you do, it’s likely to be your best bet.