Introduction to. Energy Futures

Transcription

1 Introduction to Energy Futures

2 ENERGY FUTURES ENERGY PRODUCTS ARE FOUND IN MANY AREAS OF MODERN LIFE, FROM THE FUEL IN YOUR GAS TANK TO THE HEAT IN YOUR HOME. CRUDE OIL IS EVEN USED IN THE MANUFACTURE OF CERTAIN TYPES OF PLASTICS WHICH HAVE A VAST AMOUNT OF USES. By understanding the fundamentals of the energy markets, traders, producers and investors can leverage better methods of price discovery and risk management. While there are several energy futures products, some of the most popular and widely traded are: WTI Crude Oil Futures Natural Gas Futures RBOB Gasoline Futures 02 Rosenthal Collins Group, LLC An investment in futures contracts involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant circumstances. Past performance is not necessarily indicative of future results.

3 CRUDE OIL FUTURES WTI Crude Oil: An Overview Crude oil is one of the most widely used and traded commodities on the planet. West Texas Intermediate (WTI), is sometimes referred to as Texas light sweet and is considered the benchmark for crude oil pricing. This type of crude oil is lighter than Brent crude, and features a lower sulfur content and relatively low density. [Source: Wikipedia] As of 2017, the U.S. reportedly consumed about million barrels per day according to the U.S. Energy Information Administration The world s top producers of crude oil include the United States, Saudi Arabia, Russia, China, Iraq and others. Crude oil is used to make various other fuels and products, and as energy consumption increases, demand for crude oil may continue to rise. Crude Oil Use A barrel of crude oil can be refined into many other products. Uses of Petroleum These products include: Diesel and other fuel Heavy fuel oil Gasoline Asphalt Diesel Fuel Jet Fuel Lubricants Jet Fuel Other products Gasoline Asphalt Lubricants Investing in Crude Oil 4% 1% 3% 11% There are many ways to gain exposure to crude oil including energy company stocks, ETFs, futures and more. A raw commodity like crude oil may appeal to investors for many reasons, including the potential to act as an inflationary hedge or for the possibility of price appreciation. 9% 26% 46% Source: U.S. Energy Information Administration 03 Rosenthal Collins Group, LLC

4 CRUDE OIL FUTURES General Factors Influencing Price As one of the most widely watched and traded commodities on earth, crude oil may exhibit periods of relative quiet and periods of heightened volatility. There are numerous issues that can potentially impact crude oil prices including: Supply disruptions Economic demand The Value of the U.S. Dollar Geopolitical tensions Government regulations Storage costs U.S. gasoline demand million barrels per day wk. Avg wk. Avg. 8.0 Oct Jan Apr Jul Oct Source: U.S. Energy Information Administration 04 Rosenthal Collins Group, LLC

5 CRUDE OIL FUTURES Other Factors Influencing Price Crude oil may be affected by other outside markets such as equity markets or interest rates. For example, weaker stocks may dampen risk appetite and demand for crude oil, while higher interest rates may drive a stronger dollar and emerging market volatility. 05 Rosenthal Collins Group, LLC

6 CRUDE OIL FUTURES U.S. Crude Oil Supply & Disposition Annual Supply (Thousand Barrels) Supply Field Production (Commercial) 2,059,640 2,377,762 2,725,169 3,194,915 3,434,018 3,240,159 Alaskan 204, , , , , ,169 Lower 48 States 1,854,811 2,185,361 2,537,246 3,013,785 3,257,783 3,060,990 Imports 3,261,422 3,120,755 2,821,480 2,680,626 2,687,409 2,873,208 Commercial 3,261,422 3,120,755 2,821,480 2,680,626 2,687,409 2,873,208 Strategic Petroleum Reserve (SPR) Adjustments (Commercial) 65,988 44,584 81,421 65,993 49,379 62,667 Disposition Stock Change -34,455 28,892-9,904 28,664 92,515 35,365 Commercial -3,861 29,575-10,605 33,674 88,355 35,402 Strategic Petroleum Reserve (SPR) Refinery Net Inputs -30,594 5,404, ,489, ,589,006-5,010 5,784,637 4,160 5,908, ,924,395 Exports 17,158 24,693 48, , , ,274 Products Supplied Ending Stocks Total 1,004,172 1,033,064 1,023,160 1,051,824 1,144,339 1,179,704 Commercial 308, , , , , ,622 Refinery 90,640 88,781 85,114 95, ,580 92,756 Tank Farms and Pipelines 214, , , , , ,832 Cushing, OK 29,252 49,903 41,426 31,944 63,507 67,740 Lease 22,458 27,700 29,872 32,476 32,303 Alaskan Crude Oil In- Transit by Water Strategic Petroleum Reserve (SPR) 3,151 6,350 3,578 3,951 4,381 4, , , , , , ,082 SPR Stocks Percent of Crude Oil Stocks Percent of Total Petroleum Stocks Days of Petroleum Net Imports Notes: Adjustments include an adjustment for crude oil, previously referred to as "Unaccounted For Crude Oil". A negative stock change indicates a decrease in stocks and a positive number indicates an increase in stocks. Stock change for crude oil excludes lease stocks beginning with January 2005 (see explanatory notes). Totals may not equal sum of components due to independent rounding. See Definitions, Sources, and Notes link above for more information on this table. Release Date: 8/31/17 Source: U.S. Energy Information Administration 06 Rosenthal Collins Group, LLC

7 CRUDE OIL FUTURES CME GROUP Contract Specifications Contract Unit Price Quotation Trading Hours 1,000 barrels U.S. Dollars and Cents per barrel CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. (5:00 p.m. - 4:00 p.m. Chicago Time/CT) with a 60- minute break each day beginning at 5:00 p.m. (4:00 p.m. CT) CME ClearPort: Sunday - Friday 6:00 p.m. - 5:00 p.m. (5:00 p.m. - 4:00 p.m. Chicago Time/CT) with a 60- minute break each day beginning at 5:00 p.m. (4:00 p.m. CT) Minimum Price Fluctuation $0.01 per barrel Product Code Listed Contracts CME Globex: CL CME ClearPort: CL Clearing: CL TAS: CLT TAM: CLS Crude oil futures are listed nine years forward using the following listing schedule: consecutive months are listed for the current year and the next five years; in addition, the June and December contract months are listed beyond the sixth year. Additional months will be added on an annual basis after the December contract expires, so that an additional June and December contract would be added nine years forward, and the consecutive months in the sixth calendar year will be filled in. Additionally, trading can be executed at an average differential to the previous day s settlement prices for periods of two to 30 consecutive months in a single transaction. These calendar strips are executed during open outcry trading hours. Settlement Method Deliverable Termination Of Trading Trading in the current delivery month shall cease on the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month. If the twenty-fifth calendar day of the month is a non-business day, trading shall cease on the third business day prior to the last business day preceding the twenty-fifth calendar day. In the event that the official Exchange holiday schedule changes subsequent to the listing of a Crude Oil futures, the originally listed expiration date shall remain in effect. In the event that the originally listed expiration day is declared a holiday, expiration will move to the business day immediately prior. (chart continued on next page) 07 Rosenthal Collins Group, LLC

8 CRUDE OIL FUTURES Trade At Marker Or Trade At Settlement Rules Trading at settlement is available for spot (except on the last trading day), 2nd, 3rd, 4th, 5th, 6th and 7th months subject to the requirements of Rule 524.A. TAS Trading ceases daily at 2:30 PM ET. Products eligible for TAS pricing trade off of a Base Price of 0 to create a differential (plus or minus 10 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a traditional TAS trade which will clear exactly at the final settlement price of the day. TAS calendar spread trading available in the following months: nearby/2nd, nearby/3rd, nearby/4th, nearby/5th, nearby/6th, 2nd/3rd, 2nd/4th, 2nd/5th, 2nd/6th, 3rd/4th, 3rd/5th, 3rd/6th, 4th/5th, 4th/6th and 5th/6th. TAM trading is analogous to our existing Trading at Settlement (TAS) trading wherein parties will be permitted to trade at a differential that represents a not-yet-known price. TAM trading will use a marker price, whereas TAS trading uses the Exchange-determined settlement price for the applicable contract month. As with TAS trading, parties will be able to enter TAM orders at the TAM price or at a differential between one and ten ticks higher or lower than the TAM price. Trading at marker is available for spot month on the last trading day. Settlement Procedures Crude Oil Futures Settlement Procedures Position Limits NYMEX Position Limits Exchange Rulebook NYMEX 200 Block Minimum Block Minimum Tresholds Price Limit or Circuit NYMEX 200 Vendor Codes Quote Vendor Symbols Listing Delivery Procedure Delivery shall be made free-on-board ( F.O.B. ) at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage. Delivery shall be made in accordance with all applicable Federal executive orders and all applicable Federal, State and local laws and regulations. At buyer s option, delivery shall be made by any of the following methods: (1) by interfacility transfer ( pumpover ) into a designated pipeline or storage facility with access to seller s incoming pipeline or storage facility; (2) by in-line (or in-system) transfer, or book-out of title to the buyer; or (3) if the seller agrees to such transfer and if the facility used by the seller allows for such transfer, without physical movement of product, by in-tank transfer of title to the buyer. Delivery Period (A) Delivery shall take place no earlier than the first calendar day of the delivery month and no later than the last calendar day of the delivery month. (B) It is the short s obligation to ensure that its crude oil receipts, including each specific foreign crude oil stream, if applicable, are available to begin flowing ratably in Cushing, Oklahoma by the first day of the delivery month, in accord with generally accepted pipeline scheduling practices. (C) Transfer of title-the seller shall give the buyer pipeline ticket, any other quantitative certificates and all appropriate documents upon receipt of payment. The seller shall provide preliminary confirmation of title transfer at the time of delivery by telex or other appropriate form of documentation. Grade And Quality Please see rulebook chapter 200 Source: CME Group: as of 9/20/16 08 Rosenthal Collins Group, LLC An investment in futures contracts involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant circumstances. Past performance is not necessarily indicative of future results.

9 NATURAL GAS FUTURES Natural Gas: An Overview Natural gas is a major player in the global supply of energy. First discovered in America in the early 1600s, natural gas is one of the cleanest and safest energy sources available today. William Hart dug the first natural gas well in 1821 in Fredonia, New York. This first well eventually led to the Fredonia Gas Light Company. [Source: APGA.org] Natural gas is colorless and odorless in its pure form, although quite combustible. This powerful source of energy is composed primarily of methane, and may also contain various amounts of ethane, nitrogen, hydrogen sulfide, carbon dioxide and other gases. {Source: NaturalGas.org] Natural gas is particularly useful due to the amount of energy that is released when combusted. This gas burns cleaner than other fossil fuels, and emits lower levels of potentially hazardous byproducts. With global energy needs on the rise, it is no wonder that natural gas is such an important natural resource. [Source: NaturalGas.org] Natural Gas Use Natural gas powers many key components of everyday life.among other things, this key energy source is used in: Home heating Hot water heating Cooking stoves Ovens Automobiles Investing in Natural Gas Investments in natural gas can be made in many ways, including stocks, ETFs, futures and more. As energy consumption rises, investors may speculate on rising prices or use such investments to hedge exposure to volatility in natural gas prices. As a commodity, natural gas may also potentially offer a hedge against rising inflationary pressures or a declining dollar. Consumption by Sector, Industrial Electric Power Transportation Residential Commercial Source: 09 Rosenthal Collins Group, LLC

10 NATURAL GAS FUTURES General Factors Influencing Price Although natural gas may at times exhibit a strong correlation to crude oil and other energy markets, it does have some unique characteristics that may drive price action. While there are numerous possible factors that could potentially influence prices, some of the most significant include: Overall economic conditions Energy policies Current supplies Supply disruptions Refining capacity Dollar strength or weakness Weather 10 Rosenthal Collins Group, LLC

11 NATURAL GAS FUTURES Other Factors Influencing Price While the above are some of the graphic primary catalysts for price movement in natural gas, the market may also be affected by other inputs. Some of these additional inputs include: Storage costs Transportation costs Insurance and interest costs Petroleum fuel prices Import/export levels Supplies in storage - The overall supply picture is also influenced by the level of natural gas held in underground storage fields. Storage helps to meet seasonal and sudden increases in demand, which otherwise may not be met by domestic production and imports. When demand is lower, storage absorbs excess domestic production and possibly lower-cost imports. Storage also supports pipeline operations and hub services. Levels of natural gas in storage typically increase April through October, when demand for natural gas is lower, and decrease November through March, when demand for natural gas for heating is generally high. [Source: U.S. Energy Information Administration] 11 Rosenthal Collins Group, LLC

12 NATURAL GAS FUTURES Natural Gas Gross Withdrawals and Production Marketed Production - Annual Volumes in Million Cubic Feet U.S. 24,036,352 25,283,278 25,562,232 27,497,754 28,752,935 28,294,939 Alaska 356, , , , , ,629 Alaska Onshore 294, , , , ,337 Alaska State Offshore 61,496 35,577 58,081 40,267 40,197 Arkansas 1,072,212 1,146,168 1,139,654 1,122,733 1,010, ,917 California 250, , , , , ,451 California Onshore 218, , , , ,517 California State Offshore 4,760 5,051 5,470 5,805 5,146 Federal Offshore California 26,779 27,262 27,454 14,515 8,397 Colorado 1,637,576 1,709,376 1,604,860 1,643,487 1,704,836 1,703,277 Federal Offshore Gulf of Mexico 1,812,328 1,507,564 1,309,246 1,253,678 1,288,296 1,226,458 Federal Offshore Alabama Federal Offshore Louisiana Federal Offshore Texas Kansas 309, , , , , ,524 Louisiana 3,029,206 2,955,437 2,360,202 1,960,813 1,776,800 1,861,187 Louisiana Onshore 2,958,249 2,882,193 2,282,452 1,899,491 1,723,683 Louisiana State Offshore 70,957 73,244 77,750 61,322 53,117 Montana 74,624 66,954 63,242 59,160 57,421 51,219 New Mexico 1,237,303 1,215,773 1,171,640 1,229,519 1,244,811 1,230,493 North Dakota 97, , , , , ,672 Ohio 78,858 84, , ,371 1,014,848 1,466,854 Oklahoma 1,888,870 2,023,461 1,993,754 2,331,086 2,499,599 2,468,312 Pennsylvania 1,310,592 2,256,696 3,259,042 4,257,693 4,812,983 5,263,973 Texas 7,112,863 7,475,495 7,633,618 7,985,019 7,880,530 6,985,576 Texas Onshore 7,089,072 7,458,989 7,619,582 7,973,818 7,871,209 Texas State Offshore 23,791 16,506 14,036 11,200 9,321 Utah 457, , , , , ,251 West Virginia 394, , ,853 1,067,114 1,318,822 1,375,108 Wyoming 2,159,422 2,022,275 1,858,207 1,794,413 1,793,716 1,602,701 (chart continued on next page) 12 Rosenthal Collins Group, LLC

13 NATURAL GAS FUTURES Other States Other States Total 758, , , , , ,337 Alabama 195, , , , ,249 Alabama Onshore 116, , , , ,065 Alabama State Offshore 78,649 87,398 75,660 70,829 64,184 Arizona Florida 15, Illinois 2,121 2,125 2,887 1,929 2,080 Indiana 9,075 8,814 7,938 6,616 7,250 Kentucky 124, ,122 94,665 93,091 85,775 Maryland Michigan 138, , , , ,634 Mississippi 81,487 63,843 59,272 54,446 58,207 Missouri NA NA Nebraska 1,959 1,328 1, Nevada New York 31,124 26,424 23,458 20,201 17,829 Oregon 1, , South Dakota 1,848 15,085 16,205 15,305 14,531 Tennessee 4,851 5,825 5,400 5,294 4,276 Virginia 151, , , , ,584 Notes: Beginning with monthly data for January 2006, "Other States" volumes include all of the natural gas producing states except: Alaska, Arkansas, California, Colorado, Kansas, Louisiana, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia, Wyoming, and the Gulf of Mexico. Data for 2014 are estimated. Monthly preliminary (from January 2014 to present) state-level data for the production series, except marketed production, are not available until after the final annual reports for these series are collected and processed. Final annual data are generally available in the third quarter of the following year. For years prior to 2007, coalbed production data are included in Gas Well totals. For 2007-forward, gross production from coalbed methane and shale data are from PointLogic Energy. Prior to 1997, state production for Texas, Louisiana, and Alabama includes a portion of the Federal Offshore Gulf of Mexico production. Production for these states prior to 1997 excluding the Federal Offshore Gulf of Mexico can be found at the state energy data system (seds). See Definitions, Sources, and Notes link above for more information on this table. Release Date: 09/29/ Rosenthal Collins Group, LLC An investment in futures contracts involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant circumstances. Past performance is not necessarily indicative of future results.

14 NATURAL GAS FUTURES CME GROUP Contract Specifications Contract Unit 10,000 million British thermal units (mmbtu). Price Quotation U.S. dollars and cents per mmbtu. Trading Hours CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. (5:00 p.m. - 4:00 p.m. Chicago Time/CT) with a 60-minute break each day beginning at 5:00 p.m. (4:00 p.m. CT) CME ClearPort: Sunday - Friday 6:00 p.m. - 5:00 p.m. (5:00 p.m. - 4:00 p.m. Chicago Time/CT) with a 60-minute break each day beginning at 5:00 p.m. (4:00 p.m. CT) Minimum Price Fluctuation CME ClearPort $0.001 per MMBtu CME Globex $0.001 per MMBtu Inter-commodity spreads on Globex may also occur in multiples of $ per MMBtu Product Code CME Globex: NG CME ClearPort: NG Clearing: NG TAS: NGT Listed Contracts The current year plus the next twelve calendar years. A new calendar year will be added following the termination of trading in the December contract of the current year. Settlement Method Deliverable Termination Of Trading Trading of any delivery month shall cease three (3) business days prior to the first day of the delivery month. In the event that the official Exchange holiday schedule changes subsequent to the listing of a Natural Gas futures, the originally listed expiration date shall remain in effect. In the event that the originally listed expiration day is declared a holiday, expiration will move to the business day immediately prior. Trade At Marker Or Trade At Settlement Rules Trading at settlement is available for spot (except on the last trading day), 2nd, 3rd, 4th, 5th, 6th and 7th months subject to the requirements of Rule 524.A. TAS Trading ceases daily at 2:30 PM ET. Products eligible for TAS pricing trade off of a Base Price of 0 to create a differential (plus or minus 10 ticks) versus the settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a traditional TAS trade which will clear exactly at the final settlement price of the day. TAS calendar spread trading available in the following months: nearby/2nd, nearby/3rd, nearby/4th, nearby/5th, nearby/6th, 2nd/3rd, 2nd/4th, 2nd/5th, 2nd/6th, 3rd/4th, 3rd/5th, 3rd/6th, 4th/5th, 4th/6th and 5th/6th. Settlement Procedures Natural Gas Futures Settlement Procedures Position Limits NYMEX Position Limits Exchange Rulebook NYMEX 220 Block Minimum Block Minimum Thresholds Price Limit or Circuit NYMEX 220 Vendor Codes Quote Vendor Symbols Listing Grade And Quality Natural Gas meeting the specifications set forth in the FERC-approved tariff of Sabine Pipe Line Company as then in effect at the time of delivery shall be deliverable in satisfaction of futures contract delivery bligations. Source: CME Group: as of 9/20/16 14 Rosenthal Collins Group, LLC

15 RBOB GASOLINE FUTURES RBOB Gasoline: An Overview Gasoline is a big part of everyday life for many consumers, whose household budgets and personal spending can be significantly affected by changes in gasoline prices. RBOB gasoline is the benchmark contract for gasoline trading and refers to a petroleum product known as Reformulated gasoline blendstock for oxygen blending. Prices for RBOB gasoline futures are quoted in U.S. Dollars per gallon and each contract represents 42,000 gallons of RBOB gasoline. [Source: Financialadvisory.com]. Gasoline prices are monitored closely by investors as rising energy costs can have a dramatic impact on personal spending and may affect the bottom line for companies dependent on this type of fuel. While more and more automakers and engine makers are incorporating electrical power, gasoline remains the primary fuel for automobile and other various small combustion engines. Gasoline Consumption (Thousand Barrels per Day) North America Asia & Oceania Europe Middle East Central & South America Eurasia Africa 3, RBOB Gasoline Use The primary use of RBOB gasoline is to fuel motor vehicles. In addition to autos, this fuel may also be used in: Lawn mowers Generators Boats Other engine types , , , Source: U.S. Energy Information Administration 10, Rosenthal Collins Group, LLC

16 RBOB GASOLINE FUTURES Investing in RBOB Gasoline Like other petroleum products, RBOB gasoline may garner investment interest for speculative purposes as well as for hedging purposes. Gasoline can be traded or invested in using a variety of different products including energy company stocks, ETFs and futures. 16 Rosenthal Collins Group, LLC

17 RBOB GASOLINE FUTURES General Factors Influencing Price As a byproduct of crude oil, gasoline prices can be heavily affected by changes in crude Oil prices. While gasoline and oil often exhibit a strong, positive correlation, they may also at times exhibit a divergence in price. Some of the major factors that can affect gas prices include: Overall economic conditions Weather Refining capacity Demand Dollar strength or weakness Geopolitical issues Government regulation Other Factors Influencing Price The price of gasoline seen at the pump Cost Structure Of One Gallon Of Regular Grade Gas Can also be affected by other issues including: Transportation costs Insurance costs Price setting mechanisms Dealer premiums 49% 12% 19% 20% There are numerous factors taken into consideration for the pricing of gasoline at the retail level. When you pull up to the pump to fill your car with gas, the quoted gasoline price represents not only the wholesale cost and any dealer profit margin but also: Federal, state and local excise and sales taxes including the federal and state gasoline tax Credit card transaction fees Gasoline transportation costs Various retailer overhead costs Distribution and Marketing Refining Costs and Profits Federal and State Taxes Cost of Crude Oil Source: 17 Rosenthal Collins Group, LLC

18 RBOB GASOLINE FUTURES CME GROUP Contract Specifications Contract Unit Price Quotation Trading Hours 42,000 gallons U.S. dollars and cents per gallon CME Globex: Sunday - Friday 6:00 p.m. - 5:00 p.m. (5:00 p.m. - 4:00 p.m. Chicago Time/CT) with a 60-minute break each day beginning at 5:00 p.m. (4:00 p.m. CT) CME ClearPort: Sunday - Friday 6:00 p.m. - 5:00 p.m. (5:00 p.m. - 4:00 p.m. Chicago Time/CT) with a 60-minute break each day beginning at 5:00 p.m. (4:00 p.m. CT) Minimum Price Fluctuation Product Code Listed Contracts $ per gallon CME Globex: RB CME ClearPort: RB Clearing: RB TAS: RBT Monthly contracts listed for the current year and the next 3 calendar years +1 month. Monthly contracts for a new calendar year will be added following the termination of trading in the December contract of the current year. Settlement Method Deliverable Termination Of Trading Termination At Market Or Trading in a current delivery month shall cease on the last business day of the month preceding the delivery month. Trading at settlement is available for spot (except on the last trading day), 2nd, 3rd and 4th months and subject to the existing TAS rules. Trading in all TAS products (chart continued on next page) 18 Rosenthal Collins Group, LLC

19 RBOB GASOLINE FUTURES Termination At Settlement Rules will cease daily at 2:30 PM Eastern Time. The TAS products will trade off of a Base Price of 0 to create a differential (plus or minus 10 ticks) versus settlement in the underlying product on a 1 to 1 basis. A trade done at the Base Price of 0 will correspond to a traditional TAS trade which will clear exactly at the final settlement price of the day. TAM trading is analogous to our existing Trading at Settlement (TAS) trading wherein parties will be permitted to trade at a differential that represents a not-yet-known price. TAM trading will use a marker price, whereas TAS trading uses the Exchange-determined settlement price for the applicable contract month. As with TAS trading, parties will be able to enter TAM orders at the TAM price or at a differential between one and ten ticks higher or lower than the TAM price. Trading at marker is available for spot month on the last trading day. RBOB Gasoline (RB) spot, 2nd and 3rd months and nearby/second month, second/third month and nearby/third month calendar spreads. Settlement Procedures Position Limits Exchange Rulebook Block Minimum Price Limit Or Circuit Vendor Codes Delivery Procedure RBOB Futures Settlement Procedures NYMEX Position Limits NYMEX 191 Block Minimum Thresholds NYMEX 191 Quote Vendor Symbols Listing Please see rulebook chapter 191 Source: CME Group - as of 8/20/16 19 Rosenthal Collins Group, LLC An investment in futures contracts involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant circumstances. Past performance is not necessarily indicative of future results.

20 An introduction to Energy Futures Energized for more market information? Contact an RCG broker for further insight into this sector. Additional Trading Resources: Delayed Trading Quotes & Charts Contract Specs Trading Symbols Margin Requirements Futures Calendar RCG clients receive access to daily premium research from multiple analysts: Technicals Daily Commentary Quotes Charts Have questions? Speak with an RCG broker toll free CONNECT WITH US twitter.com/rcg_futures youtube.com/user/rcgfuturestrading linkedin.com/company/rosenthal-collins-group plus.google.com/+rcgdirect