RBOB Reformulated Blendstock for Oxygenate Blending OPIS, A Dow Jones Company

03 Oct RBOB Reformulated Blendstock for Oxygenate Blending OPIS, A Dow Jones Company

Aside from its health hazards, gasoline has also long been under the gun for contributing to greenhouse gases and global climate change. To reiterate, most of the gasoline produced by refineries is actually unfinished gasoline or gasoline blendstock. The margins on calendar spreads are lower because the two contracts have a high degree of correlation and generally move in the same direction.

Understanding a Crack Spread

• There are two components to the profit margin that a refiner can achieve.
• The price of a barrel of crude oil and the various prices of the products refined from it are not always in perfect synchronization.
• In the past, Middle East wars, oil embargos, political coups and acts of terrorism have created fears of supply disruptions and higher prices.

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 fxbrew forex review – a good broker or scam 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 RBOB gasoline futures contract is settled by physical delivery. This means most investors want to liquidate positions prior to the expiration of the contracts.

Crack Spread: What it is, How to Trade It

The figures below represent global consumption and production of crude oil, of which gasoline is derived. Benchmark trades all session long with a full-day view of East of the Rockies spot fuel markets. At this point, the gasoline that comes out of the refinery is not a finished product. In the technical language of the industry, it is a blending component, or a blendstock. This means that your single-malt scotch mixes well with club soda.

However, after the invention of the automobile in 1892, gasoline became the fxcm broker main source of fuel for cars and light-duty vehicles. This makes gasoline one of the most important and well-known commodities in the world. Low Volatility ETFs invest in securities with low volatility characteristics. These funds tend to have relatively stable share prices, and higher than average yields.

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 javascript image manipulation rises past $2.30, you can sell your futures at a profit.

Reformulated Blendstock for Oxygenate Blending

Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money. Increasing demand for gasoline in Asia, Latin America and the Middle East often outpaces supply from those regions. Demand for gasoline has been steadily declining in Europe and the United States. California is the largest gasoline-consuming state with over 15 billion gallons consumed every year.

One of the most well-known refinings crack spreads is the RBOB/Brent crack spread. Similarly, if the spread is too tight, investors see that as a sign that refiners will slow production to tighten supply to a level where the demand will restore their margins. This, of course, has a dampening effect on the price of crude oil.

There are also options for energy-related ETFs focused on oil and natural gas. Whereas buying an RBOB future could cost thousands, shares of ETFs can cost less than $20. Like any other commodity, natural gas is influenced by the forces of supply and demand. The most prolific uses of RBOB gasoline is as fuel for various products such as cars, lawn mowers, generators, pressure washers, and many other common household appliances. But it also has other applications such as removing paint or grease, and is even used in numerous pesticides and weed killers see also Invest Like Jim Rogers With These Three Agriculture Stocks. Instead, ethanol is most often blended in at the rack, closer to its ultimate destination.

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. The elimination of lead in gasoline and the introduction of catalytic converters in the mid-80s was only 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.

Brent crude oil is one of several types of light sweet crude oil that serves as the global benchmark for crude oil. Brent is described as light because of its relatively low density, and sweet because of its low sulfur content. 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. An important factor to understand about gasoline is its octane rating.

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. Gasoline is also used as a fuel in equipment for construction, farming, forestry and landscaping. Electricity generators and emergency power supplies also use gasoline.

Reformulated gasoline produces less smog than other gasoline blends. As a result, around 30% of the U.S. market requires gasoline to be reformulated. Here are four important facts for anyone trying to trade the gasoline futures market. Turmoil in important oil-producing countries can create spikes in gasoline prices.