RBOB, or Reformulated Blendstock for Oxygenate Blending, is a type of gasoline used as a base for blending with oxygenates like ethanol to produce finished gasoline. The term “RBOB” primarily refers to the gasoline blendstock that is compliant with environmental regulations, specifically the Clean Air Act in the United States. It is typically traded in futures markets as a standard measure of gasoline price and serves as an important commodity in the energy sector. This article will explore the essential aspects of RBOB gasoline trading, including market dynamics, trading mechanisms, and factors that influence RBOB prices. RBOB Gasoline Futures (RB) provide traders with exposure to the reformulated blendstock for oxygenate blending (RBOB) gasoline market. These contracts are widely used by traders, refiners, and distributors to hedge price risk or speculate on changes in gasoline prices.

Much of the U.S. gasoline supply comes from refineries in the Gulf Coast region. As a result, weather events or supply congestion in that area can cause short-term delays or price spikes. RBOB stands for Reformulated Blendstock for Oxygenate Blending, a component that alvexo forex broker is used to create reformulated gasoline.

Analysis of these related ETFs and how they are trading may provide insight to this commodity. Traders stock market seasonal cycles venturing into the futures market for the first time need to consider the inherent risks… 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. Instead, ethanol is most often blended in at the rack, closer to its ultimate destination. That’s why you’ll often see ethanol listed along with gasoline and diesel in rack prices.

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After it is distilled from petroleum, RBOB is blended with ethanol to produce reformulated gasoline. The crack spread, which measures the difference between crude oil prices and the value of refined products like RBOB Best forex indicators and distillates, highlights this relationship. A widening crack spread signals strong demand or higher margins, prompting refiners to maximize throughput. Conversely, a narrowing spread may reduce refinery utilization, affecting RBOB supply. RBOB’s market behavior is closely tied to other petroleum products within the refined goods ecosystem.

Thus, investors must be aware of the different deadlines for futures contracts and offset any positions before the risk of delivery comes into play. Globally, RBOB’s relationship to other petroleum products is influenced by regional refining configurations and trade flows. U.S. refineries typically prioritize gasoline, while European facilities focus on diesel, creating opportunities for international trade.

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Now let’s look at the import volume for the CBOB for the rest of PADD 1 that does not require the reformulation. Well, let me introduce you to the two of them (and their cousin). Each of these products is recovered at different temperature points. Each fraction has molecule chains of different lengths, and each of these chains has a different boiling point.

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 psi during the summer. Methanol, derived from natural gas, and isobutylene from the butane obtained in the crude oil refining process, are reacted together to form MTBE.

Refining Costs and Profits

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. Prices for RBOB gasoline futures logically have a high degree of correlation with crude oil since gasoline is distilled from crude. Thus, some of the global supply and demand factors for crude oil also apply to RBOB. So, what does smarter fuel policy actually look like in practice?

• Internal combustion engines, like those found in automobiles, burn fuel in controlled processes.
• The blendstocks are a mix of components such as butane, reformate and FCC gasoline, which can be combined in different ways to reach needed specifications.
• The concern is that MTBE gets into the water supply from leaking underground storage tanks or from gasoline spilled onto the ground.
• 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.
• Well, let me introduce you to the two of them (and their cousin).

Gasoline, diesel and jet fuel spot pricing, news and commentary for the US Gulf Coast, Atlantic Coast and Midwest.

June Nymex natural gas (NGM25 ) on Friday closed up by +0.081 (+2.49%). June nat-gas prices on Friday recovered from an early slide and settled higher. June Nymex natural gas (NGM25 ) on Tuesday closed up by +0.064 (+1.92%).

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• It is safe to say that most investors do not want to take physical delivery of that much gas.
• At this point, the gasoline that comes out of the refinery is not a finished product.
• First, transportation of this fuel can be expensive, as can the refining process to turn crude into gasoline.
• 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.

During the summer months, the demand for gasoline typically increases due to higher travel activity, especially in countries like the United States. Conversely, during the winter months, gasoline demand generally declines, which can result in lower prices. Unlike conventional gasoline, which is a finished product ready for consumption, RBOB is an unfinished gasoline blendstock.

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. The Clean Air Act of 1970 introduced a tidal wave of regulation to the automotive and oil industries (and many others). CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 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.

From a chemical standpoint, this low-density fuel is very volatile due to its natural makeup and the numerous additives that can be mixed in, some of which include lead, ethanol, and dye. As a globally traded commodity, the price of RBOB gasoline can be affected by fluctuations in exchange rates, particularly the value of the U.S. dollar. Since RBOB gasoline is priced in U.S. dollars, a stronger dollar can make RBOB gasoline more expensive for buyers using other currencies, while a weaker dollar can have the opposite effect.

Commitment of Traders Positions as of May 20, 2025

The energy crisis of 2022 tested subsidy systems and pricing frameworks across the globe. The choices governments make today, about how to support consumers, price energy, and manage reform, will shape future resilience. With better tools now in hand, those choices can be more targeted, more sustainable, and better aligned with long-term development goals. Like any other commodity, natural gas is influenced by the forces of supply and demand. An important factor to understand about gasoline is its octane rating. Internal combustion engines, like those found in automobiles, burn fuel in controlled processes.

Lawrence Pines is a Princeton University graduate with more than 25 years of experience as an equity and foreign exchange options trader for multinational banks and proprietary trading groups. Mr. Pines has traded on the NYSE, CBOE and Pacific Stock Exchange. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives. Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts. Seasonal pollution requirements for gasoline can also lead to disparities in pricing as can weather-related disruptions to refinery operations. Crack spreads are a way to measure the margins for refining crude products and can serve to predict how tight the supply of products is in different markets.

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. 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.

Introduction to RBOB Gasoline

It does not contain ethanol and must be mixed with it (usually in a 10% blend) before it is sold as finished gasoline. RBOB gasoline is also less volatile and has a lower Reid Vapor Pressure (RVP), which helps to control evaporative emissions in warmer weather. During summer, increased travel typically drives up gasoline demand, resulting in higher RBOB prices. Refineries may undergo maintenance or switch production blends, temporarily reducing supply and elevating costs.