Light components include gasoline, which is condensed from a gas back into a liquid. 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 how to buy augur per barrel. When the crack spread is negative there is no incentive for refiners to purchase and refine Brent oil. This generally occurs during a recession or Brent oil is artificially buoyed by supply disruptions.

  • Although it does not receive as much investor interest as crude oil futures, the contract serves as an essential vehicle for market participants seeking to speculate and hedge in the gasoline market.
  • Between 74%-89% of retail investor accounts lose money when trading CFDs.
  • Of America’s largest nationwide chains, Chevron scores the highest points in overall customer satisfaction.

RBOB gasoline futures are listed on the Chicago Mercantile Exchange (CME) under the futures symbol RB. Although it does not receive as much investor interest as crude oil futures, the contract serves as an essential vehicle for market participants seeking to speculate and hedge in the gasoline market. Futures trading volumes in European ethanol, as listed by CME Group, look set to rise throughout 2023 as traders further adopt strategies to deal with higher blends being used in gasoline across the continent. Other markets such as sustainable aviation fuel (ethanol to jet fuel) and some of the bio plastics are also seen as a positive boost on demand for ethanol. Export-orientated refiners in Europe refer to the NYMEX futures contract in their export sales to the U.S. market. The growth of international participation in the contract has been very beneficial to the global trade in gasoline components such as RBOB and its European equivalent, Eurobob.

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However, because it takes time for a strategic release to work its way into the refining process, drivers are not likely to see pump prices fall when they hit the road for the U.S. On January 1, 2021, the EPA’s final rule focusing on streamlining existing gasoline, diesel, and other fuel quality regulations took effect. The US Environmental Protection Agency (EPA) administers the Clean Air Act (CAA) requirements, and various state agencies regulate their own specific air rules. Under the CAA, the urban areas with the highest levels of smog pollution are required to use clean-burning Reformulated Gasoline blended with 10% ethanol. These urban areas include the entire northeastern United States plus the California, Chicago, Atlanta, and Houston metropolitan areas.

Electricity generators and emergency power supplies also use gasoline. 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. Now let’s look at the import volume for the CBOB for the rest of PADD 1 that does not require the reformulation. Before I forget, there is the blending-stock cousin, CARBOB, a special RBOB formula mandated by the state of California.

What Drives the Price of Gasoline?

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience. The EU has embarked on a pathway to reduce overall greenhouse gas emissions by 55% by 2030 and sees the “Fit for 55 Package” as a central piece of legislation.

What is RBOB Gasoline?

First, transportation of this fuel can be expensive, as can the refining process to turn crude into gasoline. The prices of RBOB are directly correlated with crude oil, meaning that they will exhibit significant volatility that may be an attractive trait for many traders. Secondly, investments in gasoline can also be used to hedge against inflation, or simply to make a play on our global addiction to fossil fuels. Gasoline is a vital part of our everyday lives, and there is a strict need to consume no matter what economic conditions may be, making it an attractive investment during all kinds of markets.

Like some rivals, Shell does have a robust rewards program that allows members to earn 5-, 10- or 20 cent-per-gallon discounts through everyday gas station purchases, and it ranked well for outdoor lighting. The standard one adds a 1% cash-back bonus to the BPme rewards on any nonfuel purchases at participating stations. The higher-tier BP Visa credit card takes 10 cents off per gallon, earns 3% cash back on groceries and 1% cash back on any purchase made outside of a BP station. The map above illustrates a color-coded patchwork of different blends of reformulated gasoline, each one a specific cocktail for the climate.

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 dwti after hours trading represents 42,000 gallons with a minimum fluctuation of $0.0001 per gallon. Listed contracts conduct trading throughout the next 36 consecutive months.

To these blendstocks other liquids are added to make the substances that fuel our carpools, take us to grocery stores and get our families to their summer vacations. And, mostly, that final mixology does not happen at the refinery level. Gasoline is similar in that it has multiple components that make up the gasoline recipe.

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At the end of that recipe you have two types of almost finished gasoline called Conventional Blendstock for Oxygenate Blending and Reformulated Blendstock for Oxygenate Blending. From the standpoint of reliable liquidity, ease of execution, capital efficiency, and transparency of pricing, this can be well implemented with CME E-mini Russell 2000 Index futures. Cargoes can be blended to suit the requirements for a particular state. The higher ethanol blend into gasoline was first introduced into Europe in 2009 but since then it has gathered significant momentum with around half of the total EU member states adopting it. The majority of countries in northwest Europe have adopted the higher ethanol blendstock and several eastern European countries.

And, a protective layer of plastic lines the insides of gasoline delivery trucks. This also means that fuel ethanol attracts water, making it corrosive to the steel used in pipelines and  plumbing at oil refineries. If ethanol is pushed through a pipeline, the water that it attracts will corrode the inside of the pipes. If it’s mixed with gasoline at the refinery, every pipe and tank that it passes through will be subjected to higher levels of corrosion. 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.

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. 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.

California is the largest gasoline-consuming state with over 15 billion gallons consumed every year. In the lead-up to summer, prices tend to rise in anticipation of peak driving season. Prices tend to fall in the winter when inclement weather keeps consumers off the roads. Seasonal pollution requirements for gasoline can also lead to disparities in pricing as can weather-related disruptions to refinery operations. Gasoline is also used as a fuel in equipment for construction, farming, forestry and landscaping.

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, how to calculate lot size forex making our nation so dependent on foreign oil. The supply of E10 gasoline is becoming more readily available across much of northwest Europe and is available for sale in 13 EU member states.

Additionally, RBOB gas prices move before the price at the pump moves. So this may give you some insight into what retail gas prices will be in a few days. Individuals who own a business that is sensitive to gas prices—a trucking company, for example—can use RBOB gas futures as a hedge. If you expect a future increase in gas prices, you can buy an RBOB futures contract, say, at $2.30 a gallon. If the price of gas rises past $2.30, you can sell your futures at a profit.

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. 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. Monday’s rally in the dollar index to a 10-month high was bearish for energy prices.