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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 https://traderoom.info/ 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. Gasoline futures contracts expire on the last business day of the month prior to the delivery month.

In the technical language of the industry, it is a blending component, or a blendstock. 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 to farmers and manufacturers. Today, ethanol is used primarily as motor fuel and a fuel additive. The cold air allowed engines to run cooler, creating more unburned hydrocarbons. This, combined with the way cold air tends to trap warmer exhaust, created hazier and smoggier days.

1. Another important factor is the seasonal changes in gasoline demand — gasoline demand tends to decline during the winter months.
2. Accounts opened through StoneX One are currently available to U.S. persons only.
3. Due to gasoline’s widespread use, it has come under fire for numerous health and environmental concerns over the last few decades.
4. If ethanol is pushed through a pipeline, the water that it attracts will corrode the inside of the pipes.
5. Industry watchers measure refiners by their capacity, which is the amount of crude oil that can go into distillation units.
6. When the crack spread is negative there is no incentive for refiners to purchase and refine Brent oil.

Drivers use more gas in the summer, which also affects the price because of the increase in demand. Not all the technical planets are aligned for a huge rally, however. Trader sentiment, as measured by the Bullish Consensus published by Market Vane is not at levels typically consistent with bottoming action. Somewhere over 60% of traders identify as bullish and more bearish sentiment is more typical for oil price valleys. At first glance, this week’s price action for West Texas Intermediate, Brent and RBOB look similar to the previous trading days of 2024. WTI briefly reached a new yearly high-water mark of $75.83/bbl but true to the form of the new year, a fade ensued and the Cushing contract settled at $75.09/bbl.

The Middle East used to have a stranglehold on the top ten producers worldwide, but the U.S. recently surpassed the region’s output. For the most part, this list contains both emerging and frontier markets, which is what makes gas prices so volatile. 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.

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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. RBOB is an acronym for “Reformulated Gasoline Blendstock for Oxygenate Blending”. The new popularity of RBOB in the exchanges owes much of its success to state legislation banning gasoline with MTBE. This chemical was found in unleaded gasoline and posed a threat for people and wildlife because it polluted groundwater sources.

Sometimes this instability has led to questions about the supply of oil. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the U.S. Commodity Futures Trading Commission fxopen review (CFTC) as a Futures Commission Merchant and Commodity Trading Advisor. Exchange based futures and options products and services are offered solely through the FCM division of SFI.

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. Gasoline derives from refining crude oil, so the price of crude oil has a big impact on its price.

MTBE also displaces gasoline components such as aromatics— e.g., benzene and sulfur—optimizing the oxidation during combustion. Since both producers of WTI and Brent compete for the same refiners as customers, the spread between the two oils is an important metrics for refiners. WTI is quoted on the Chicago Mercantile Exchange for pickup in Cushing Oklahoma. This area is landlocked and therefore requires shipment via pipeline or rail. Crude oil varieties and the technology available for refining them can lead to different gasoline products and pricing from one refinery to the next.

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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.

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. Other production/refining methods include polymerization, alkylation, and isomerization.

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If the price of gas drops below $2.30, you would sell the futures at a loss but save money at the pump. If you just want to speculate on price movements, you may trade the CFD of RBOB Gasoline futures contracts via an online CFD broker, such as IG. With a CFD contract, you are in an agreement with the broker to exchange the price difference between the opening and closing of a trade. So, you only trade price fluctuations without having to worry about the rigors of asset delivery in direct futures trading.

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. An RBOB Gasoline futures strategy is the technique and method you can use to profitably trade RBOB Gasoline futures contracts. RBOB Gasoline futures refer to futures contracts whose underlying asset is a specified quantity and quality of RBOB Gasoline.

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Brent Crude is extracted from the North Sea and comprises Brent Blend, Forties Blend, Oseberg and Ekofisk crudes. Brent crude oil is used to price nearly 65% of all global crude oils. A typical 42-gallon barrel of crude oil yields 45 gallons of petroleum products.

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 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. 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.