What is RBOB Gasoline? A CommodityHQ com Guide

You should consider whether you can afford to take the high risk of losing your money. A typical 42-gallon barrel of crude oil yields 45 gallons of petroleum products. Gasoline represents nearly half of the petroleum products produced, which ranks it as the number one product recovered during the refining process. The price for the RBOB gasoline futures contract is quoted in U.S. dollars and cents. The minimum price tick for RBOB is 0.0001, equivalent to a movement of $4.20 for one contract. The initial margin to hold one futures contract is $4,460, with a maintenance margin of $4,060, but these margin amounts are subject to modification by the CME based on the volatility of the contract.

Top Countries by Gasoline Production

Since ethanol may increase the NOx, other additives and formulations are needed to meet higher air quality standards in California, which has a lower NOx limit. The elimination of lead in gasoline and the introduction of catalytic converters in the mid-80s was only enterprise technology consulting the first step in cleaning up the air. Other compounds, such as sulfur and benzene, still made it past the catalytic converter and into the air.

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 the commitments of traders bible psi during the summer.

Refining

This combination of low gasoline and high distillate refining margins may signal a shift by refiners to maximize diesel fuel production instead of gasoline production. The crack spreads in the Amsterdam-Rotterdam-Antwerp (ARA) region of Europe and in Singapore, two global refining and distribution hubs, suggest markets in these regions are experiencing similar trends. Crude oil and gasoline prices Wednesday settled lower, with gasoline posting a 1-week low. Crude oil was under pressure Wednesday from an easing of geopolitical risks in the Middle East after Israel and Hezbollah agreed to a cease-fire. Losses in crude were limited after the dollar index (DXY00) tumbled to a 2-week low.

Factors Affecting Natural Gas Prices

From this point on in the supply chain, the lexatrade corrosive nature of ethanol is not a concern. The tanks and piping systems of most gasoline stations today are constructed out of fiberglass and corrosion-resistant plastics. And, a protective layer of plastic lines the insides of gasoline delivery trucks. Today, ethanol is used primarily as motor fuel and a fuel additive. Much of the U.S. gasoline supply comes from refineries in the Gulf Coast region.

• There are also options for energy-related ETFs focused on oil and natural gas.
• Edwin Drake, the first American to drill for oil, discovered gasoline by accident when he was distilling oil to make kerosene for heating.
• These different chains are blended together in various proportions to provide a consistent product for motor fuel.
• Minimum contracts are equal to 42,000 gallons (1,000 barrels) and trade for the value per gallon.

The supply of gasoline depends on the availability of both crude oil and refineries. Industry watchers measure refiners by their capacity, which is the amount of crude oil that can go into distillation units. Conversely, inventories of distillate have fallen in November and are 5.8 million barrels lower than at the same time in 2017. 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. The figures below represent global consumption and production of crude oil, of which gasoline is derived. RBOB is more expensive to refine—more energy and more effort are required to pull some of the additional hydrocarbons out of the fuel.

Do you notice that there are no imports prior to the middle of 2004? 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.

U.S. gasoline refining margins are forecast to average 13 cents/gal in the fourth quarter of 2018, compared with 29 cents/gal in the fourth quarter of last year. Changes in margins in the Gulf Coast were similar, falling from 27 cents/gal in the first half of the year to 1 cent/gal in October and falling further to negative values during November. By comparison, New York Harbor ultra-low sulfur diesel margins averaged 38 cents/gal in the first half of 2018 and increased to 40 cents/gal in October and to more than 50 cents/gal in November. 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.

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.

As a result, weather events or supply congestion in that area can cause short-term delays or price spikes. RBOB gas contracts are traded on the Chicago Mercantile Exchange. You can get access to trading them through most brokerage firms and futures trading portals.