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RBOB Gasoline Crack Spread FuturesRBOB Gasoline Crack Spread FuturesRBOB Gasoline Crack Spread Futures

RBOB Gasoline Crack Spread Futures

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ARE1! trade ideas

Gasoline almost back to pre-war levelsGasoline in the US has been trending lower and lower, now down 30% from its ATH. It hasn't filled the breakaway gap yet, but I think it will do so in the next few weeks, and that could be an excellent opportunity to go long in the short term. Oil has filled the gaps and chopped at support for a while but is looking weak. What is strange is how supply is limited, the spot market is strong... yet the paper market (futures, etc.) is invalid. Maybe the weakness is due to broadly slowing growth and economic activity, though I am not sure the REAL recession is here yet. The energy crisis isn't over, especially not in Europe... and this could get worse before they get better. Most issues remain the same, and there is very little progress. There are no new refineries; few nuclear plants are active again, Russia is still limiting gas flows to Europe, sanctions make oil flows harder, and OPEC+ cannot increase capacity fast. Our energy needs constantly grow, yet our production has plateaued. Very little can be done now to ease our problems, and our problems will become even worse if the SPR is drained and the US stops supplying the world with oil from its reserves. Most solutions require time, and politically many of these are not welcome by the green movement. Essentially, we have energy producers and green activists colluding to increase energy prices so that the first make more money and the second to make themselves feel good while simultaneously destroying people's lives and the environment. I believe crude oil could get down to 75$ and even 55$ in the short term but ultimately will go much higher once the Fed and other central banks are forced to cut rates and print money. It's all about managing your positions until we get to that point, as a big recession could cause oil and gas prices to tank. Oil and gasoline prices rose so fast that it is almost impossible for such a move not to cause a recession and consequently demand destruction. If we look at Gasoline prices in terms of other fiat currencies, we can see that they went 70% higher than their 2008 peak, which is a lot. I multiplied the RBOB with DXY to get a better picture of the actual cost of gas for everyone outside the US, as the US is less than 25% of the global economy. That means that for almost 90% of the population and 75% of the worldwide economy, gasoline costs 70% more than in 2008. This will have tremendous consequences, especially given the rate at which prices increase. In conclusion, although I don't think prices have bottomed, and we could see a sharp decline in the next few months, I believe gasoline and oil prices will go much higher, and dips are for buying.
NYMEX:RB1!
by BitcoinMacro
GASOLINE Head and Shoulders likely to turn long-term bearishGasoline (RB1!) has been rising since the March 2020 bottom on a straight Channel until late February 2022 where war and inflation worries turned it parabolic as illustrated by the use of the Fibonacci Channel extensions. Following the June 06 market top, a Head and Shoulders (H&S) pattern was formed that hit (and so far rebounded on) the 1D MA200 (orange trend-line), a level touched for the first time since December 23 2021. A break below the Support, should target the lower extension of the 1D MA300 (green trend-line), if not a retest of the Shoulder Resistance and potentially rejection on the 1D MA50 (blue trend-line) would initiate the 1D MA300 drop. This trend-line has been Gasoline's Support since December 08 2020. This however may be the perfect opportunity to break it finally as the H&S pattern typically end such parabolas in fashion to at least the 0.618 Fibonacci Retracement level. Interestingly enough, that happens to be currently on the 1W MA200 (red trend-line). -------------------------------------------------------------------------------------------------------- Please like, subscribe and share your ideas and charts with the community! --------------------------------------------------------------------------------------------------------
NYMEX:RB1!Short
by TradingShot
1
Gas futures down 7 of the last 9 weeksFirst of all, I used to always use CL1 as my main source of oil & energy. That measures Crude Oil futures. I think now is also an important reminder about the differences between Crude Oil futures and Gasoline Futures. Before I really get started, let me say I am a big believer in new energy sources. I just don't think it makes sense to dig something up from the ground, burn it once, and then it's gone forever. Especially when it's possible to find sources of energy that are continually producing, no questions asks, no input or output required, just going at all times. The sun is one example. Anyways, let's get back to the chart above that RB Gasoline Futures. This means reformulated gasoline, which is a cleaner type of fuel that is used in most cars and automobiles. So the chart is interesting because you can get feel for the price of gas, the cost to fill up a car, at any given moment. However, keep in mind that gasoline futures involve the delivery of 42,000 gallons of gasoline per contract. That's a lot! I don't know many traders who have enough space to store 42,000 gallons of gasoline. That's true for all futures contracts... they are huge quantities. So if you look at RB1! you will see an interesting double bottom. That looks playable. But then again, 42,000 gallons per contract. Oil is coming on globally, cars are getting more efficient, and new energy sources are emerging. My takeaway from all of this simple: a tradeable bounce is here. Quick swing trade. But I am not so sure that bounce will blast off quickly to the moon. So this entire chart and energy market is in a strange situation. Did the bull rally come and go that fast? More importantly, what does that mean for all other markets from stocks to crypto? I would add this chart to your Watchlist...
NYMEX:RB1!
by scheplick
6
RBOB GASOLINE FUTURES (RB1!), H4 Potential for Bullish RiseType : Bullish Rise Resistance : 3.4808 Pivot: 3.3401 Support : 3.2003 Preferred Case: On the H4, with prices bouncing off the ichimoku indicator and moving along the ascending trendline while the RSI is moving along an ascending trendline, we have a bullish bias that price will rise to the pivot at 3.3401 in line with the swing high resistance and 78.6% fibonacci projection. Once there is upside confirmation of price breaking the pivot structure, we would expect bullish momentum to carry price to 1st resistance at 3.4808 where the swing high resistance and -61.8% fibonacci expansion are. Alternative scenario: Alternatively, price may drop to the 1st support level at 3.2003 in line with the swing low support and 78.6% fibonacci projection. Fundamentals: No Major News
NYMEX:RB1!Long
by Genesiv
RBOB GASOLINE FUTURES (RB1!), H4 Potential for Bullish RiseType : Bullish Rise Resistance : 3.3488 Pivot: 3.2843 Support : 3.1886 Preferred Case: On the H4, with prices moving above the ichimoku cloud and along the ascending trendline , we have a bullish bias that price will rise to the pivot at 3.2843 in line with the swing high resistance, 50% fibonacci retracement and 78.6% fibonacci projection . Once there is upside confirmation of price breaking pivot structure, we would expect bullish momentum to carry price to 1st resistance at 3.3488 in line with pullback resistance, 61.8% fibonacci retracement and 161.8% fibonacci extension . Alternative scenario: Alternatively, price may drop to the 1st support level at 3.1886 in line with the pullback support. Fundamentals: Investors are worried interest-rate hikes will slow the economy as central banks get aggressive in combating inflation , giving us a lower demand for gasoline and resulting in a bearish view on gasoline. We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.
NYMEX:RB1!
by Tickmill
RBOB GASOLINE FUTURES (RB1!), H4 Potential for Bullish RiseType : Bullish Rise Resistance : 3.3488 Pivot: 3.2843 Support : 3.1886 Preferred Case: On the H4, with prices moving above the ichimoku cloud and along the ascending trendline , we have a bullish bias that price will rise to the pivot at 3.2843 in line with the swing high resistance, 50% fibonacci retracement and 78.6% fibonacci projection. Once there is upside confirmation of price breaking pivot structure, we would expect bullish momentum to carry price to 1st resistance at 3.3488 in line with pullback resistance, 61.8% fibonacci retracement and 161.8% fibonacci extension. Alternative scenario: Alternatively, price may drop to the 1st support level at 3.1886 in line with the pullback support. Fundamentals: Investors are worried interest-rate hikes will slow the economy as central banks get aggressive in combating inflation, giving us a lower demand for gasoline and resulting in a bearish view on gasoline. We'll need to exercise caution for this setup because our fundamentals and technicals are not completely aligned.
NYMEX:RB1!Long
by Genesiv
Gasoline Bearish Formation"Gasoline... breakfast of champions" - Joe Dirt Consistent with our view of #Oil, gasoline shows us a beautiful bear wedge. Are we all just expected to pay $4.50+ / gal of gasoline? This seems like a tall ask for the American consumer, considering prices are significantly elevated across most of the American ( & global ) economy. Emerging markets getting beat up all around the globe Commodities have started to selloff Interest rates are rising USD ripping higher crypto bubble... popping...? Let's see how it goes! God bless!
NYMEX:RB1!Short
by ChiefMacro
RBOB GASOLINE FUTURES (RB1!), H4 Potential for Bearish DropType : Bearish Momentum Resistance : 3.6525 Pivot: 3.5009 Support : 3.1892 Preferred Case: On the H4, with price moving below the ichimoku cloud and along the descending trendline, we have a bearish bias that price will rise and drop from the pivot at 3.5009 in line with the overlap resistance to the 1st support at 3.1892 where the 61.8% fibonacci projection and swing low support are. Alternative scenario: Alternatively, price may break pivot structure and rise to the 1st resistance at 3.6525 where the pullback resistance, 100% fibonacci projection and 78.6% fibonacci retracement are. Fundamentals: U.S. gasoline demand is down roughly 4.5% from last week, giving us a bearish bias on gasoline.
NYMEX:RB1!Short
by Genesiv
RBOB GASOLINE FUTURES (RB1!), H1 Potential for Bullish RiseType : Bullish Rise Resistance : 3.8663 Pivot: 3.6472 Support : 3.5036 Preferred Case: On the H4, with price moving above the ichimoku cloud and within the ascending channel , we have a bullish bias that price will drop and rise from the pivot at 3.6472 in line with the overlap support and 38.2% fibonacci retracement to the intermediate resistance at 3.7250 where the 127.2% fibonacci extension and overlap resistance are. Once there is upside confirmation of price breakthough of intermediate resistance, we would expect bullish momentum to carry price to the 1st resistance at 3.8663 where the swing high resistance and 78.6% fibonacci projection are. Alternative scenario: Alternatively, price may break pivot structure and drop to the 1st support level at 3.5036 in line with the swing low support and 100% fibonacci projection . Fundamentals: Due to global supply demand issues of gasoline originating from the sanctions in place against Russia, we have a bullish view on gasoline.
NYMEX:RB1!
by Tickmill
RBOB GASOLINE FUTURES (RB1!), H1 Potential for Bullish RiseType : Bullish Rise Resistance : 3.8663 Pivot: 3.6472 Support : 3.5036 Preferred Case: On the H4, with price moving above the ichimoku cloud and within the ascending channel , we have a bullish bias that price will drop and rise from the pivot at 3.6472 in line with the overlap support and 38.2% fibonacci retracement to the intermediate resistance at 3.7250 where the 127.2% fibonacci extension and overlap resistance are. Once there is upside confirmation of price breakthough of intermediate resistance, we would expect bullish momentum to carry price to the 1st resistance at 3.8663 where the swing high resistance and 78.6% fibonacci projection are. Alternative scenario: Alternatively, price may break pivot structure and drop to the 1st support level at 3.5036 in line with the swing low support and 100% fibonacci projection . Fundamentals: Due to global supply demand issues of gasoline originating from the sanctions in place against Russia, we have a bullish view on gasoline.
NYMEX:RB1!Long
by Genesiv
Has Gasoline Price Already Peaked?NYMEX:RB1! While the U.S. stock market performed miserably lately, energy commodities have a banner year. According to the American Automobile Association (AAA), the national average gasoline price reached an all-time high of $5.016 a gallon on June 14th. Diesel logged its own record on June 19th, at $5.816 a gallon. Crude oil price hike is certainly a major contributing factor. However, refined products have been rising a lot faster. AAA gasoline was at record high $4.114 in July 2008 when WTI crude oil made history at $147 a barrel. Last month, WTI peaked at $123, at 16% below the 2008 high. However, gasoline broke $5, a whopping 22% above its 2008 record. Since mid-June, WTI lost steam and entered a downturn. It trades below $110 today. Meanwhile, gasoline price barely moved and still stands above $4.80 per AAA data. In my view, the gasoline market has already peaked, and a downtrend would follow. RBOB gasoline wholesale price, currently at $3.68 a gallon, could fall 30% or more in the next year. I came to this assessment based on two key factors: Firstly, refining margins could decrease significantly due to mean reversion. Refinery is the process to turn crude oil into gasoline, diesel, heavy fuel oil and other petrochemical byproducts. Refining margin measures the revenue from selling refined products, subtracting the cost of crude oil and natural gas going into the process. Below is a simple formula: Refining margin = revenue (94% of crude processed) - costs (crude oil + natural gas used) Whereas refining revenue = 23% gasoline + 63% diesel oil + 8% heavy fuel oil A barrel of 42-gallon crude oil is processed into 40 gallons of refined. For each barrel, you would get approximately 25 gallons of gasoline, 9 gallons of diesel, and 3 gallons of heavy fuel oil. According to Polish oil refiner LOTOS Group, the latest daily model refining margin is $59.06 per barrel of crude oil. Before the Russia-Ukraine conflict, refining margin was below $10 in February. Margins were in single digits throughout 2021 and sometimes even turned negative. Crack Spread is a “quick and dirty” way to measure profit margin of a U.S. refinery. To calculate the 3:2:1 crack spread for a Gulf Coast refinery that processes Louisiana Light Sweet (LLS) crude oil, add the spot price for two barrels of Gulf Coast conventional gasoline to the spot price for one barrel of Gulf Coast ultra-low sulfur diesel. Then subtract the spot price for three barrels of LLS crude oil. Finally, divide the result by 3 to produce a crack spread in dollars per barrel. Once the summer driving season is over, I expect crack spread to go down due to a combination of market force (reduced demand) and political pressure. Secondly, gasoline demand could decline significantly in a U.S. economic recession. In the past 15 years, gasoline market has crashed three times. The first was in 2008, following the subprime crisis. The second time in 2014, driven by a 60% crude oil price fall. The latest was in March 2020 when COVID-19 broke out in the U.S., leading most states to travel restrictions, lock-down or social distancing. Today, a Federal Reserve tracker suggests that the U.S. has already entered a recession. The Atlanta Fed’s GDPNow, which tracks economic data in real time, sees second-quarter GDP contracting by 1%. Coupled with the first-quarter’s 1.6% decline, two consecutive quarters of negative GDP fits the technical definition of a recession. Gasoline market is very sensitive to changes in consumer spending. Automobile driving, which shows clear “seasonal patterns”, is the dominant demand factor. In my view, this is the defining price driver in RBOB. For viewers who read my previous writings, you would understand why I prefer RBOB over WTI in forming a trading strategy – it’s more straight-forward with fewer moving parts. A short position in NYMEX RBOB Gasoline Futures (RB) is a way to express this bearish view. The January (RBF3) contract is quoted at $2.779 on July 1st. RBOB futures is based on wholesale gasoline price. We could add $1 to RBF3 to get to a ballpark estimate of retail price in January. For the month after the Christmas holiday seasons, $3.80 a gallon seems to be overpriced. RBOB futures is quoted at USD per gallon. Each contract has a notional value of 42,000 gallons (1,000 barrels), equivalent to $116,760 in current market value. To place an order, $8,500 margin is required per contract. A move of 1 cent in gas price will result in $420 gain or loss to your account. Alternatively, if you are uncertain of which direction gasoline price would go, but agree that refining margin could revert to mean, we could Short the Crack Spread . A 3-2-1 short crack spread can be constructed by placing 3 Short WTI, 2 Long RB and 1 Long HO contracts. We can also monitor the following data points to be released to test the validity of these two trade set-ups: • Holiday driving data (July 4th, Labor Day, Thanksgiving and Christmas) • Q2 and Q3 earnings releases from the retail sector (Walmart, Target, Dollar General, etc.) • Q2 and Q3 GDP data • Monthly CPI data • Fed rate decisions (JUL 26-27, SEP 20-21, NOV 1-2, and DEC 13-14) Russia-Ukraine conflict poses the biggest risk to our trade. If the contagion risk intensifies and ripples through Europe, energy prices could hike sharply again. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Editors' picks
NYMEX:RB1!Short
by JimHuangChicago
76
Gasoline futures - what's brewing?The recent plunge in commodities has seen Gasoline futures tumble --- price is down 20% from its recent highs -- and evidence is mounting there could be more. Here is what we are seeing under the surface: 1. Head and shoulders activated: The market has broken the neckline of a head and shoulders pattern, which is a pattern with 3 peaks, where the central peak is the highest --- the head. The two lower peaks on either side of this head are the left and right shoulder; now the sizes of these shoulders can vary and in this case, the right shoulder is "shallower" which represents weakness. Also notice that the neckline is upward sloping and as we speak, is broken, thereby activating additional downside. The target is the vertical distance from the head to the neckline, reduced from the point of breakdown --- making $2.93 a possibility based on this pattern alone. This is a "typical" target, it may be met or it may not be. In case of the latter, the failure to meet the downside target will be an indication of "strength" and the resulting rally can be furious. 2. Moving Average support broken: The 55-day SMA has been a key marker which has led to reactions in the past, particularly during corrections within the prior uptrend. Although the DMA is still rising, any further sideways/downward movement in price will flatten the average out, emboldening the bear. 3. Elliott wave count: There will be, as there always is, a couple of alternate counts to the preferred EW labelling used here. I believe some sort of a 3rd wave peak occurred at the $3.89 high. From here, a sharp decline ensued which was retraced in its entirety by the subsequent recovery to the $4.32 high. However, this looks more like a B wave. Therefore, we believe the sharp decline from $3.89 to $2.88 was an A. Now this means we are either doing a Flat (3-3-5) or a Running triangle (3-3-3-3-3) where wave (b) of the triangle exceeds the length of wave (a) of the pattern. The flat could either be an expanded flat or a running flat (rare). If its a running triangle, then more churn is expected between $2.88 and $4.32 --- yes its a large range, but the expanded volatility of the market means this range will continue to hold till the pattern completes itself and leads to a truly trending move. Regardless of the internals of the count, if the $3.89 high was only a wave 3 high (of some degree), then this correction is a wave 4 and therefore, the door is still open for Gasoline to travel higher in a 5th wave --- once the current bearish trend exhausts itself. We will wait for the market to move and eliminate some viable possibilities and truly zero down on what is really the preferred path. Right now, both the flat and the triangle pattern are valid, so we take it one day at a time. 4. Supports Some possible areas of support from my several years of experience with the wave theory lie at $3.35 - $3.13 - $2.98 Good luck trading and happy weekend to all. Stay safe. - Guest Author on behalf of the CMT Association
NYMEX:RB1!
by CMT_Association
7
Elevated Refinery Margin Suggests Additional Oil UpsideRefinery margin explained: The refinery margin is the percentage of profit generated from the sale of refined crude products. A 3:2:1 refinery spread margin percentage is charted here. A 3:2:1 refinery spread approximates the profit generated from a barrel of oil by subtracting the cost of 3 barrels of crude oil from the revenue generated via the sale of 2 barrels of gasoline and 1 barrel of heating oil. When the profit is divided by the total revenue, as this chart does via the formula below, then a percentage of profit is calculated, ie. a refinery margin. Side notes: Heating oil contracts are traded as diesel fuel hedges because heating oil and diesel are distilled from similar temperature ranges, with heating oil being slightly heavier. The abbreviation for barrel = bbl Refinery margin = profit/revenue = (2bbl gasoline + 1bbl diesel - 3bbl crude)/(2bbl gasoline + 1bbl diesel) = (84*RB1! + 42*HO1! - 3CL1!)/((84*RB1! + 42*HO1!) There are 42 gallons in a barrel so RB and HO which are priced in gallons need to be multiplied by 42 to convert to barrels so as to have the same units as CL which is priced in barrels. The formula as entered into tradingview is divided by 3 to factor out the unnecessary 3. This step isn’t necessary and leaving it as written above will yield the same result, it’s just cleaner without the 3. Chart explained: The refinery margin going back to 1985 is plotted as a blue line for the purpose of identifying trends which tend to occur when it reaches the level of .328 i.e. 32.8% profit margin. The occurrences of that margin level are indicated with red vertical lines and there are arrows on the CL chart plotted below showing if the crude oil price reacted by going up using green arrows or if it reacted by going down using red arrows. There is a yellow arrow at the end because the future reaction to the currently-elevated margin is yet to be determined. RB1! and HO1! are shown below CL for reference. At this level of profit margin, crude tends to outperform gasoline and heating oil which causes the refinery margin to go down. This outperformance tends to come in the form of crude oil going up quicker than its products. Outperformance can also come in the form of oil not dropping as quickly as products or staying flat while products drop. Historically, oil has risen to bring the margin down, but also historically, RB and HO have not reached these levels and CL has not gone much higher than this, so this analysis is applying historical norms to historical aberrations. It suggests going long crude oil but that’s just my take on it.
NYMEX:RB1!Long
by Skipper86
11
Gasiline RBOB Commodity USA Sun Storm Investment Trading Desk & NexGen Wealth Management Service Present's: SSITD & NexGen Portfolio of the Week Series Focus: Worldwide By Sun Storm Investment Research & NexGen Wealth Management Service A Profit & Solutions Strategy & Research Trading | Investment | Stocks | ETF | Mutual Funds | Crypto | Bonds | Options | Dividend | Futures | USA | Canada | UK | Germany | France | Italy | Rest of Europe | Mexico | India Disclaimer: Sun Storm Investment and NexGen are not registered financial advisors, so please do your own research before trading & investing anything. This is information is for only research purposes not for actual trading & investing decision. #debadipb #profitsolutions
NYMEX:RB1!
by Sunstorminvest