correlation of Gasoline with Brent Crude

Discussion in 'Commodity Futures' started by Trader13, Sep 14, 2011.

  1. Trader13

    Trader13

  2. bone

    bone

    Actually, RBOB gasoline has the highest statistical correlation to the S&P 500 as compared to any other product in the Nymex or ICE complex. Seriously.
     
  3. heech

    heech

    I've notices the same. Heating oil has also been moving more correlated with Brent than WTI. Sorry, don't have an explanation for you... although I could always speculate.

    Perhaps transporting refined products is easier than raw crude? And of course refineries are often built for specific flavors of crude... so supply is not truly fungible.

    So perhaps refined HO and RB could be exported to Europe/Asia, maintaining a more fixed global market?
     
  4. Trader13

    Trader13

    Just digging a little more, I learned that the majority of US refineries use Brent crude, perhaps because they are located near the coast so the choice of Brent vs WTI is driven largely by distribution access. Learn something new every day ...
     
  5. Thanks for that bit. Always good to know the actual processes that go on in the markets.
     
  6. m22au

    m22au

    For the time being, $WTIC remains an irrelevant benchmark when considering the prices of oil derivatives, such as gasoline.

    This is largely due to delivery problems at Cushing, Oklahoma.

    For more information on this problem, just do an Internet search using some of these word combinations:

    WTI Cushing delivery problems
    WTI Cushing pipeline problems
    why is wti cheaper than brent

    One article that may explain things in further detail (if you really need an explanation) is
    http://ourfiniteworld.com/2011/02/19/why-are-wti-and-brent-prices-so-different/