What is the RBOB Brent Crack Spread and How is it Used in Energy Trading?

what is rbob

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Role of Refineries

Due to gasoline’s widespread use, it has come under fire for numerous health and environmental concerns over the last few decades. From a health standpoint, the fuel stores numerous carcinogenic chemicals, and can be a danger to the general public if a leak were ever to occur. This means that storage tanks, delivery trucks, and refining plants present the most dangerous threats of the chemical being released into the environment.

What is the RBOB / Brent Crack Spread?

RBOB is Reformulated Blendstock for Oxygenated Blending, a mix of petrochemicals intended to be mixed with ethanol to produce finished motor gasoline. For dynamically-generated tables (such as a Stock or ETF Screener) where you see more than 1000 rows of data, the download will be limited to only the first 1000 records on the table. For other static pages (such as the Russell 3000 Components list) all rows will be downloaded.

what is rbob

RBOB Gasoline Daily Price

RBOB gasoline often goes by the names gasoline, petro gasoline or petrol. 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 a „BOB“ (before oxygenate blending) because it is formulated for subsequent blending with 10% ethanol to form the final gasoline blend that is marketed to end users.

RBOB Gasoline Monthly Price – US Dollars per Gallon

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. This requires refiners to substitute more expensive components into gasoline.

In order to get a useful Kagi chart, one should choose this Reversal carefully. There is no reasonable default value for all symbols, some values produce too few and some too many bars. For this reason, many traders allow the Reversal to be computed using the ATR study. If you are not logged into the site, or have not set up a default Chart https://forex-reviews.org/hotforex/ Template (free site membership required), the default chart presented is a 6-Month Daily chart using OHLC bars. If you are logged in (recommended for the BEST viewing experience), we remember your chart settings for the next time you view a chart. The supply of gasoline depends on the availability of both crude oil and refineries.

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. This means that your single-malt scotch mixes well with club soda. 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.

Do you notice that there are no imports prior to the middle of 2004? 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. 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. View the latest top stories from our trusted partners, with a focus on today’s futures and commodity markets.

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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. Another very actively traded crude oil is WTI (West Texas Intermediate).

It is also important to note that our consumption is roughly twice that of our production, making our nation so dependent on foreign oil. You can use the CME Group website or the Nasdaq website to find the current price of a gallon of RBOB gas. Still, if you consider both together, about 200,000 barrels of BOB are imported every day into the PADD 1 area. Lawsuits continued, and oil companies asked for transition assistance in the form of $2 billion and liability protection while they phased out MTBE.

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. Today, ethanol is used primarily as motor fuel and a fuel additive. 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.

Gasoline represents nearly half of the petroleum products produced, which ranks it as the number one product recovered during the refining process. Refineries heat crude oil at temperatures of several beaxy review hundred degrees and place the boiling liquid into distillation columns called stills. The boiling process produces gasoline as well as other products including kerosene and diesel fuel.

The list of symbols included on the page is updated every 10 minutes throughout the trading day. However, new stocks are not automatically added to or re-ranked on the page until the site performs its 10-minute update. The Expressions dialog allows you to choose from a number of popular commodity spreads. When you select a popular spread from the drop-down list, the expression is built automatically for you. You may also create your own custom spread chart by entering the mathematical calculation.

By default, a Line Break chart is set to use a Line Count of 3 (accessible in the Chart Settings by the Bar Type). A Line Break chart with a Line Count of 3 compares the current closing price to the closing price of the line from 2 period’s ago. Edwin Drake, the first American to drill for oil, discovered gasoline by accident when he was distilling oil to make kerosene for heating. Drake considered gasoline a useless byproduct of the distillation process and discarded it. Like any other commodity, natural gas is influenced by the forces of supply and demand.

  1. As a result, around 30% of the U.S. market requires gasoline to be reformulated.
  2. You can get access to trading them through most brokerage firms and futures trading portals.
  3. 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.
  4. To create this quote, RBOB gasoline is converted into US dollars per barrel.
  5. Methanol, derived from natural gas, and isobutylene from the butane obtained in the crude oil refining process, are reacted together to form MTBE.

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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. 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 https://forex-review.net/ Exchange for pickup in Cushing Oklahoma. This area is landlocked and therefore requires shipment via pipeline or rail. RBOB became the benchmark in the United States largely because of legislation banning gasoline with the chemical MTBE which was found in unleaded gas prior to legislation.

A template is used to display a chart with pre-defined settings, such as aggregation, bar type, studies, and more. Site members may further identify a default chart template to always apply to a new chart in the Site Preferences page found in the My Barchart tab. A typical 42-gallon barrel of crude oil yields 45 gallons of petroleum products.

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. You do, however, have the ability to selectively clear just the studies, just the tools/annotations, or to clear all.

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. The price for the RBOB gasoline futures contract is quoted in U.S. dollars and cents.

RBOB stands for Reformulated Blendstock for Oxygenate Blending, a component that is used to create reformulated 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. Oil refineries separate out the different chains by heating the crude oil to different vaporization points, and then distilling the resulting vapors. Gasoline is a mixture of those hydrocarbon chains with boiling points below that of water. These different chains are blended together in various proportions to provide a consistent product for motor fuel.

Crude oil varieties and the technology available for refining them can lead to different gasoline products and pricing from one refinery to the next. Gasoline derives from refining crude oil, so the price of crude oil has a big impact on its price. An important factor to understand about gasoline is its octane rating. Internal combustion engines, like those found in automobiles, burn fuel in controlled processes. The higher the octane rating, the higher the compression rate, with a more efficient fuel capable of a higher output than those with a lower octane rating. While we refer to the liquid as “gasoline” in the U.S., many other parts of the world know it by the term “petrol”, or sometimes “petrogasoline”.