Risk Warning: Your Capital is at Risk.
In this guide to trading RBOB gasoline, we’ll explain how and where you can trade this popular commodity. We also list regulated brokers that are available in your country.
In a hurry? If you want to get started trading RBOB asap, here are brokers available in to consider:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Contents
How to Trade RBOB Gasoline
Traders have several ways of trading on the price of gasoline:
| Method | Complexity Rating (1 = easy, 5 = hard) | Storage Cost | Expiration Date | Management Cost | Leverage | Regulated Exchange |
|---|---|---|---|---|---|---|
| Gasoline Futures | 5 | ❌ | ✅ | ❌ | ✅ | YES |
| Gasoline Options | 5 | ❌ | ✅ | ❌ | ✅ | YES |
| Gasoline ETFs | 2 | ❌* | ❌ | ✅ | ❌** | YES |
| Gasoline Shares | 2 | ❌ | ❌ | ❌ | ✅ | YES |
| Gasoline CFDs | 3 | ❌ | ❌ | ❌ | ✅ | YES |
*Most energy ETFs invest with futures and avoid storage costs.
**Some energy ETFs offer exposure to 2X or 3X the movement in commodity prices.
Gasoline Futures
The New York Mercantile Exchange (NYMEX), a commodities and futures exchange operated by the Chicago Mercantile Exchange (CME), offers a gasoline futures contract that settles into 42,000 gallons of RBOB gasoline per contract. The contract trades globally on the CME Globex electronic trading platform.
Futures are a derivative instrument through which traders make leveraged bets on commodity prices. If prices decline, traders must deposit additional margin in order to maintain their positions.
Gasoline futures contracts expire on the last business day of the month prior to the delivery month. At expiration, traders must either accept physical delivery of gasoline or roll their positions forward to the next trading month.
Trading in futures requires a high level of sophistication since factors such as storage costs and interest rates affect pricing.
Gasoline Options
The NYMEX offers an options contract on gasoline futures. Options are also a derivative instrument that employ leverage to trade in commodities.
As with futures, options have an expiration date. However, options also have a strike price, which is the price above which the option finishes in the money.
Options buyers pay a price known as a premium to purchase contracts. An options bet succeeds only if the price of gasoline futures rises above the strike price by an amount greater than the premium paid for the contract.
Therefore, options traders must be right about the size and timing of the move in gasoline futures to profit from their trades. Gasoline options contracts expire three business days prior to the expiration of the underlying futures contract.
Gasoline ETFs
These financial instruments trade as shares on exchanges in the same way that stocks do. There is currently only one pure-play gasoline exchange-traded fund (ETF) – United States Gasoline Fund (NYSEARCA: UGA).
In addition, there are many ETFs that trade more broadly in the energy sector, including these popular funds:
- PowerShares DB Energy Fund (NYSEARCA: DBE)
- iPath Bloomberg Energy Total Return Sub-Index ETN (NYSEARCA: JJE)
Gasoline Shares
There are many companies engaged in extracting, refining and selling crude oil and crude oil products. These companies are not pure-play investments in gasoline, but the performance of their shares is correlated with crude oil and refined crude products.
Shares of oil companies can also react to other factors including the performance of management and the stock market in general.
| Current Price | Overview | Listings | Founded | |
|---|---|---|---|---|
 ExxonMobil | American multinational oil and gas corporation | New York (NYSE) | 1999 | |
 Royal Dutch Shell | British-Dutch multinational headquartered in The Netherlands | London (LSE), Amsterdam (Euronext), New York (NYSE) | 1907 | |
 Chevron Corporation | US multinational energy corporation | New York (NYSE) | 1879 | |
 Total SA | French energy multinational | Paris (CAC), New York (NYSE), Amsterdam (Euronext) | 1924 | |
 BP | Headquartered in London but the USA houses the lion share of its operations | London (LSE), Frankfurt (FWB), New York (NYSE) | 1908 | |
 Petrochina | Chinese oil and gas company. Listed arm of state-owned China National Petroleum Corporation | Hong Kong (SEHK) Shanghai (SSE) New York (NYSE) | 1999 | |
 Sinopec | Chinese oil and gas company based in Beijing | Shanghai (SSE), Hong Kong (SEHK), New York (NYSE), London (LSE) | 2000 | |
 Enterprise Products Partners | Natural gas and oil pipeline company headquartered in Houston, TX. | New York (NYSE) | 1968 | |
 Conoco Phillips | The world's largest independent pure-play exploration and production company. | New York (NYSE) | 1875 | |
 Eni | Italian multinational oil and gas company headquartered in Rome. | Rome (BIT) New York (NYSE) | 1953 |
Gasoline CFDs
A popular way to trade in gasoline is through the use of Contracts for Difference (CFDs) derivative instrument. CFDs allow traders to speculate on RBOB gasoline prices without purchasing ETFs, futures, options or shares of oil companies.
The value of a CFD is the difference between the price of gasoline at the time of purchase and the current price. CFD traders, therefore, have direct economic exposure to the commodity.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Where Can I Trade Energy Commodities?
Start your research with reviews of these regulated brokers available in that offer a variety of options for trading and speculating on the price of gas and other commodities.
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.
Reasons to Trade RBOB Gasoline
Here are some common reasons that traders consider trading on gasoline:
- Speculating on Oil Demand
- Political Instability
- Global Warming Concerns
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Speculating on Oil Demand
Trading in gasoline is a way to express a bullish view on crude oil. If the global economy grows at a strong rate, then eventually there may be an insufficient supply of fossil fuels available to meet demand. Gasoline prices will benefit from these developments.
As emerging market economies grow, people will purchase more cars and other forms of transportation. This supply/demand imbalance should cause gasoline prices to rise.
Political Instability
The OPEC countries are key determinants of the supply of oil available in the global marketplace. Many of these countries have experienced political instability in the recent past. Sometimes this instability has led to questions about the supply of oil.
Also, the OPEC countries have often had disagreements with one another about production levels. Such disruptions or instability would likely be bullish for gasoline prices.
Global Warming Concerns
Destructive weather has the potential to disrupt refinery capacity and raise oil and petroleum prices.
If global warming patterns continue, many scientists believe that the United States will experience more intense storms during hurricane season.
If these storms shut down refineries, then the United States, the world’s largest consumer of gasoline, will have to seek new sources for petroleum products. Gasoline prices will likely surge under this scenario.
Reasons Not to Trade RBOB Gasoline
Traders should also consider these risks associated with investing in gasoline:
- Environmental Concerns
- Regulation
- Global Recession
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Environmental Concerns
Burning gasoline creates pollution and may contribute to global warming. As these concerns intensify, strong competition from greener energy sources might emerge.
Electric cars and alternative biofuels are early-stage but are growing threats to the gasoline industry.
Regulation
Because gasoline produces carbon emissions, many countries are finding ways to incentivize less consumption. If countries phase out gasoline or tax it very heavily, then demand could plummet.
Global Recession
Weak economic conditions could cause gasoline and many other commodity prices to suffer.
What Do Experts Think About Gasoline?
Experts have different opinions about gasoline prices, but there is a consensus that its price is tied to both crude prices and refinery capacity.
In the view of many analysts, growing demand for crude combined with strains on refining capacity could drive gasoline prices higher.
Janet Kong, Senior Executive, BP
Demand for distillates such as gasoline is driving higher global demand for crude oil.
Janet Kong, Senior Executive, BP
T. Boone Pickens, Founder of Mesa Petroleum
I do believe that oil production globally has peaked at 85 million barrels. And I’ve been very vocal about it. And what happens? The demand continues to rise. The only way you can possibly kill demand is with price. So the price of oil, gasoline, has to go up to kill the demand. Otherwise, keep the price down, the demand rises.
T. Boone Pickens, Founder of Mesa Petroleum
Further Reading
- Learn More About RBOB Gasoline
- Learn to Trade Energy Commodities
- Find a Commodities Broker
- Learn About Crude Oil
