What are Gasoline Futures?
Unleaded gasoline futures, known as Reformulated Gasoline Blendstock for Oxygen Blending (RBOB), are extremely useful financial instruments used by gasoline producers and marketers to protect against the risk of price fluctuations in the gasoline market.
A Gasoline future is a standardized contract that is traded on an exchange between a buyer and a seller. The buyer of the contract agrees to take delivery of a specific quantity of gasoline from the seller at an agreed upon price, on a future date.
Since gasoline is made from crude oil, it experiences extreme volatility, just like the crude oil market. This makes gasoline futures a crucial instrument in managing price volatility for the gasoline industry.