RBOB Gasoline is a type of fuel, with the acronym RBOB standing for ‘reformulated gasoline blend-stock for oxygen blending’. RBOB gasoline is a derivative of crude oil, and RBOB gasoline is the new name used to refer to unleaded gas futures when they are included in on the international system of commodity trading.
In order to be traded at the commodities exchanges, the gasoline must be of a certain quality, namely containing 10% denatured fuel ethanol of 92% impurity. This product is then ready for the addition of 10% ethanol at the truck rack. RBOB gasoline replaces unleaded gas (petrol) as the benchmark gasoline commodity, as unleaded gas contained the harmful chemical MTBE, notorious for polluting ground water. RBOB gasoline consequently is produced without the use of MTBE.
As a commodity, RBOB gasoline has several key features. Gasoline is incredibly important as a fuel, particularly in the automotive industry, and so the demand for it is at an all time high. In the current market climate there will always be a buyer for gasoline, and with the finite amount of gasoline available for production it is theoretically possible that prices could sky rocket as supplies dwindle.
RBOB gasoline futures are traded primarily on the New York Mercantile Exchange (NYMEX), under the contract code of RB. A standard futures contract of RBOB gasoline is for 42,000 U.S. Gallons. A slightly different variant is traded on India’s Multi Commodity Exchange, where it has the ticker symbol GASOLINE.
The main market for RBOB gasoline is the fuel industry, as it can be used in cars, planes, and many other gasoline powered vehicles. The main consumer globally of gasoline is the USA, which leads in terms of consumption rates by a considerable margin. China comes in second in terms of barrels consumed, with Japan trailing at a distant third.
RBOB gasoline is an important product stemming from the New York Harbour barge market, and it accounts for almost half of the natural crude oil consumption in the US.
There are several factors however, observable on an RBOB gasoline chart, that influence the price of RBOB gasoline futures. The price of crude oil is obviously the most relevant feature that traders must consider, as a rise in crude oil prices will automatically signal an increase in the RBOB gasoline price. The reverse is also true, but as the supply of crude oil is limited, this will most likely be seen to a lesser degree. Furthermore, as most of the refineries of American RBOB gasoline are located in the Gulf of Mexico, any problems with weather in these areas can mean the supply of RBOB gasoline decreases, driving up the price of RBOB gasoline futures. The appeal of RBOB gasoline may also be affected by the appearance of alternative fuels, with bio-fuels being seen to be much less polluting than petroleum-based products. Lastly, the RBOB gasoline price can also be affected to a large degree by taxation rates.
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