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

Futures involve leverage, which can sink a whole account in days with relatively small moves. California is the largest gasoline-consuming state with over 15 billion gallons acy superior for trading, an australia trademark of acy capital pty ltd application number consumed every year. Ironbeam provides a robust trading platform and API to help you access RBOB Gasoline Futures with ease. Trade confidently with free real-time Level 2 market data and personal broker support. RBOB and CBOB are two types of gasoline that are commonly confused. While they both fuel your car, there are some key differences between the two.

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

• CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
• In investing, RBOB gas is the benchmark for gasoline on the futures market.
• It is safe to say that most investors do not want to take physical delivery of that much gas.
• 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.
• Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts.
• Prices for RBOB gasoline futures logically have a high degree of correlation with crude oil since gasoline is distilled from crude.

Gasoline derives from refining crude oil, so the price of crude oil has a big impact on its price. Reformulated Blendstock for Oxygenate Blending (RBOB) gasoline is a fuel product made from refined crude oil. RBOB gasoline often goes by the names gasoline, petro gasoline or petrol. Twelve US states are required by law to implement reformulated gasoline or RBOB in their required areas. California, Connecticut, and New Jersey are among the most popular.

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. The chart above shows the weekly average import volume, in thousands of barrels, of RBOB (with special blending components for blending with ethanol) into the PADD 1—Northeast area. Do you notice that there are no imports prior to the middle of 2004? 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.

What is RBOB (Reformulated Blendstock for Oxygenate Blending)?

Some factors contributing to RBOB’s unique market are the fact that most gasoline refining takes Libra cryptocurrency stock place in the Gulf Coast and that some regions of the US tax gasoline heavier than others. For example, California taxes gasoline at 68 cents per gallon, while Alaska charges 14 cents in tax. Factors such as inventory levels, geopolitical issues, refinery shutdowns, and weather can also affect pricing. The acronym RBOB stands for Reformulated Blendstock for Oxygenate Blending (RBOB), which is a key component in creating reformulated gasoline. Simply put, reformulated means that the gasoline does not contain any Methyl tert-butyl ether (MTBE). To produce reformulated gasoline, a blend of RBOB is mixed with ethanol for an environmentally safe final product.

Enter Stage Left – Ethanol

In the past, Middle East wars, oil embargos, political coups and acts of terrorism have created fears of supply disruptions and higher prices. Refineries heat crude oil at temperatures of several 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. These industrial facilities separate crude oil, which consists of different hydrocarbons, into smaller component hydrocarbons or fractions.

The drawbacks of rbob vs. cbob

Certain retail brands also add additional additives to their high octane “Premium” gasoline, which can add performance benefits unrelated to the octane itself. To trade RBOB Gasoline Futures, you’ll need to meet specific margin requirements. Check out Ironbeam’s Margins Page for the latest margin rates and details. Ultimately, the choice between RBOB and CBOB depends on your needs and budget.

What Is The Difference Between Rbob And Cbob

Environmental regulations in the United States, for example, require gasoline sold in the summer to be less susceptible to evaporation. Each of these products is recovered at different temperature points. The Octane Rating measures how resistant gasoline is to unexpected combustion and engine knock. “Octane” is a specific hydrocarbon molecule known for reducing engine knock. In older engines, gasoline could combust too early or late, causing the pistons in the engine to fall out of sync and causing a loud “knock” in the engine.

• Since gasoline is a by-product of crude oil, RBOB traders keep close tabs on the price of WTI or Brent crude due to their tight price correlation.
• Environmental impact is the biggest difference between the two options.
• Most regions of the US use CBOB, or Conventional Blendstock of Oxygenate Blending.
• Producing reformulated gasoline using ethanol presents problems for refiners.
• Futures involve leverage, which can sink a whole account in days with relatively small moves.
• The consumer uses the end product that is created for them by the refiner.
• The Brent/RBOB crack spread is calculated as the price difference between Brent crude oil and that of RBOB gasoline.

Both are petroleum-based products, and while they might appear to be the same, they have some key differences that you should be aware of. Traders 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 the foreign exchange matrix by barbara rockefeller and vicki schmelzer as cars, lawn mowers, generators, pressure washers, and many other common household appliances.