This, combined with the way cold air tends to trap warmer exhaust, created hazier and smoggier days. Because gasoline produces carbon emissions, many countries are finding ways to incentivize less consumption. If countries phase out gasoline or tax it very heavily, then demand could plummet. Electric cars and alternative biofuels are early-stage but are growing threats to the gasoline industry. Destructive weather has the potential to disrupt refinery capacity and raise oil and petroleum prices.
Gasoline options contracts expire three business days prior to the expiration of the underlying futures contract. As mentioned above, gasoline is a natural by-product of crude oil. For every three barrels of crude oil refined, approximately two barrels of gasoline can be salvaged. Refining this essential fuel can be done in a variety of ways, with the most popular being forms of “cracking”. Cracking is a process whereby hydrocarbon molecules are broken up by heat and pressure into lighter molecules. There are various forms of this process, including thermal cracking (the most popular) and catalytic cracking.
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. MTBE gives water an unpleasant taste and can render large quantities of groundwater unfit for human consumption. The concern is that MTBE gets into the water supply from leaking underground storage tanks or from gasoline spilled onto the ground. A popular way to trade in gasoline is through the use of Contracts for Difference (CFDs) derivative instrument.
It is common because it is considered better for the environment and is how to become a currency broker required in some areas. New technologies such as electric-powered vehicles, for example, could substantially reduce demand for gasoline. This requires refiners to substitute more expensive components into gasoline.
RBOB Gasoline Supply and Demand
Gasoline is a mixture of those hydrocarbon chains with boiling points below that of water. These different chains are blended together in various proportions to provide a consistent product for motor fuel. Futures contracts aren’t as popular among individual investors as stocks and bonds because they are generally harder to analyze and trade. Futures involve leverage, which can sink a whole account in days with relatively small moves.
Seasonal Demand
- Industry watchers measure refiners by their capacity, which is the amount of crude oil that can go into distillation units.
- Weaker-than-expected global economic news Friday heightened concerns about energy demand and weighed on crude prices.
- At this point, the gasoline that comes out of the refinery is not a finished product.
- Refiners can add it directly into the blending stream as gasoline leaves the refinery.
Longer chains make heavier hydrocarbons, as well as higher boiling points. Here are four important facts for anyone trying to trade dukascopy europe review 2021 the gasoline futures market. Crude oil varieties and the technology available for refining them can lead to different gasoline products and pricing from one refinery to the next. The costs of operating refineries and the productivity of those refineries can have a major effect on gasoline prices.
GO IN-DEPTH ON RBOB Gasoline PRICE
When it comes to crude consumption, the U.S. uses more than the next four highest consumers combined. It is also important to note that our consumption is roughly twice that of our production, making our nation so dependent on foreign oil. RBOB gas is a grade of gasoline commonly used in the United States.
How do you trade RBOB gasoline?
This supply/demand imbalance should cause gasoline prices to rise. 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. The Middle East quantitative trading systems used to have a stranglehold on the top ten producers worldwide, but the U.S. recently surpassed the region’s output.
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. 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. Weaker-than-expected global economic news Friday heightened concerns about energy demand and weighed on crude prices. Also, Friday’s action by Saudi Arabia to cut crude prices to Asian customers for October delivery signals weak demand and was negative for oil prices. Gasoline futures contracts expire on the last business day of the month prior to the delivery month.
Reasons Not to Trade RBOB Gasoline
Gasoline derives from refining crude oil, so the price of crude oil has a big impact on its price. Consumers use gasoline for fuel in cars, light trucks and motorcycles as well as recreational vehicles, boats and small aircraft. A crack spread is the difference between the wholesale price of a refined petroleum product such as gasoline and the price of crude oil. Ethanol needs to be mixed into gasoline at the local terminal racks, just before it’s delivered. The ethanol and gasoline are splash blended as the tanker truck fills before making the final trip to the gasoline station. From this point on in the supply chain, the corrosive nature of ethanol is not a concern.
Such disruptions or instability would likely be bullish for gasoline prices. 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 in order to maintain their positions. The statistics for RBOB gasoline are not perfect due to the fact that production and consumption is measured by crude oil rather than gasoline itself.
CFDs allow traders to speculate on RBOB gasoline prices without purchasing ETFs, futures, options or shares of oil companies. Gasoline itself was not invented, but rather was discovered as a by-product of the production of kerosene and the refining of crude oil. It was thrust into popularity with the introduction of automobiles, which had the option of using various fuel sources, but ultimately settled upon gasoline for its strong combustion properties. Since then, numerous developments have improved the quality of gasoline as it is refined from crude oil all over the world. Gasoline can be a particularly nasty thorn in a consumer’s side; prices at the pump can wildly fluctuate due to the dramatic price swings of crude over small periods of time. The price for the RBOB gasoline futures contract is quoted in U.S. dollars and cents.