HO and RB: heating oil and gasoline
Introduce the two main refined-product futures, HO and RB, and the seasonal patterns that move them.
Lesson path
Futures, Indices, and Commodities
Energy Futures
Pass the check before saving this lesson.
Pass the check to unlock nextOpen track mapChange starting pointToday's tiny win: make one idea click.
Introduce the two main refined-product futures, HO and RB, and the seasonal patterns that move them.
After the refinery — heating oil and gasoline futures
Crude oil isn't a finished product. It needs to be refined — heated, separated into fractions, treated — before it becomes useful. The most economically important fractions are gasoline (what cars burn) and middle distillates (diesel, jet fuel, heating oil). NYMEX lists futures on the two main US benchmarks for these refined products: RB for RBOB gasoline blendstock, and HO for heating oil (ultra-low sulfur diesel). Both deliver physically at New York Harbor.
Specs: one contract of either HO or RB represents 42,000 gallons — which equals 1,000 barrels, the same as CL. The tick is small: $0.0001 per gallon, or $4.20 per tick per contract. The contracts are physically deliverable at New York Harbor, the main pricing point for East Coast refined products. Both contracts are smaller and less liquid than CL, but they track crude closely with seasonal overlays of their own.
Seasonality on these products is real and tradeable. RB (gasoline) demand peaks in the US summer driving season — the stretch from Memorial Day (late May) to Labor Day (early September). RB also has a hard specification shift each spring: from roughly April through May, US refineries transition to summer-grade gasoline, which has lower vapor pressure (less prone to evaporating) and costs more to produce. This shift typically lifts RB prices into late spring and is one of the most reliable seasonal patterns in commodities.
HO (heating oil) follows the opposite calendar. Demand peaks in winter — November through February — when northeastern US homes burn distillate for heating. A cold spell in New England can rip HO higher in days. The contract also trades as a proxy for diesel and jet fuel demand more broadly, since it's the most liquid US distillate contract. For traders, the practical playbook is: understand which season you're in, recognize which product is in its demand peak, and be aware that products can decouple from crude during specifically driven moves. A gasoline-specific supply problem (refinery outage, pipeline issue) can lift RB while crude sits still.
Recap: HO (heating oil) and RB (gasoline) are the main NYMEX refined-product contracts. Both 42,000 gallons / $4.20 tick. RB peaks in summer driving season; HO peaks in winter heating season. The crack spread ties them back to crude.
Knowledge check
Answer before moving on.
1. Each spring, US refineries transition to summer-grade gasoline with lower vapor pressure. What's the typical impact on RB prices?
2. What does a '3:2:1 crack spread' represent?
Pass the check before saving.
Use the knowledge check first. After you pass it, this card turns into the save-and-continue handoff.