RBOB is an acronym for “Reformulated Gasoline Blendstock for Oxygenate Blending”. The new popularity of RBOB in the exchanges owes much of its success to state legislation banning gasoline with MTBE. This chemical was found in unleaded gasoline and posed a threat for people and wildlife because it polluted groundwater sources. As a result, RBOB, which does not contain MTBE, has quickly grown in popularity with futures traders, and it has also become the new benchmark gasoline contract.
|RBOB Gasoline Contract Specifications|
|Contract Size||42,000 gallons|
|Price Quotation||U.S. dollars and cents per gallon.|
|Trading Hours||CME Globex: Sunday – Friday 6:00 p.m. – 5:15 pm ET with a 45-minute break each day beginning at 5:15 pm ET|
|CME ClearPort: Sunday – Friday 6:00 p.m. – 5:15 pm ET with a 45-minute break each day beginning at 5:15 pm ET|
|Minimum Price Fluctuation||$0.0001 per gallon|
|Product Code||CME Globex: RB|
|CME ClearPort: RB|
|Listed Contracts||Monthly contracts listed for the current year and the next 3 calendar years +1 month. Monthly contracts for a new calendar year will be added following the termination of trading in the December contract of the current year.|
|Last Trade Date||Trading in a current delivery month shall cease on the last business day of the month preceding the delivery month.|
|Trade At Marker Or Trade At Settlement Rules||Trading at settlement is available for spot (except on the last trading day), 2nd, 3rd and 4th months and subject to the existing TAS rules. Trading in all TAS products will cease daily at 2:30 PM Eastern Time. The TAS products will trade off of a “Base Price” of 0 to create a differential (plus or minus 10 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a “traditional” TAS trade which will clear exactly at the final settlement price of the day.
TAM trading is analogous to our existing Trading at Settlement (TAS) trading wherein parties will be permitted to trade at a differential that represents a not-yet-known price. TAM trading will use a marker price, whereas TAS trading uses the Exchange-determined settlement price for the applicable contract month. As with TAS trading, parties will be able to enter TAM orders at the TAM price or at a differential between one and ten ticks higher or lower than the TAM price. Trading at marker is available for spot month on the last trading day.
RBOB Gasoline (RB) spot, 2nd and 3rd months and nearby/second month, second/third month and nearby/third month calendar spreads.
|Settlement Procedures||RBOB Gasoline Futures Settlement Procedures|
|Exchange Rules||These contracts are listed with, and subject to, the rules and regulations of NYMEX|
|Source: CME Group|
RBOB Gasoline Facts
Gasoline is made up of hundreds of hydrocarbons that allow for its use as a fuel for mainly car engines and other internal-combustibles. Petroleum crude oil is the most popular and cheapest means of a fuel source because of a refinery’s ability to turn more than half of a crude oil barrel into gasoline. There are three steps in the refining process that include separation, conversion, and treatment. There is an additional process called hydro treating that eliminates sulfur from the gasoline product. Currently, hydro treating is only required in California.
Octane measures the ability of gasoline to withstand common “engine knock”. That is why gas stations have 3 grades of fuel including regular, mid-grade, and premium, with octane and price increasing with each grade. This does not necessarily mean that the fuel will burn any better for a car engine, but just at a slower rate, which helps decrease that knocking.
The passage of the Clean Air Act of 1990 ensured that ethanol would be added to the gasoline supply to reduce harmful emissions that are released into the air from engine exhausts.
Last updated September 2015
Recent Posts on RBOB Gasoline
- Trendline Holds in RBOB…time to go to work!!! (8/10/2018)- Let's go! This market isn't for everyone...its a BIG contract and there are NO minis
- Trade Spotlight: Options (Unleaded Gasoline) (9/28/2017)- This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Options, published on Wednesday, September 27, 2017. RBOB Bear Put Spread There is a trade opportunity based on Trend Line breakout today in the Unleaded Gasoline (RBOB) futures market. There is a Double Top Formation with highs at 1.6258 (1/04/17) and 1.6822 (9/29/17).… Read more.
- Trade Spotlight: Futures (Unleaded Gasoline) (9/28/2017)- This is a sample entry from Don DeBartolo’s email newsletter, Trade Spotlight: Futures, published on Wednesday, September 27, 2017. There is a trade opportunity based on Trend Line breakout today in the Unleaded Gasoline (RBOB) futures market. There is a Double Top Formation with highs at 1.6258 (1/04/17) and 1.6822 (9/29/17). The Stochastic indicator is… Read more.