Gasoline - A Report Brought to You by Q8 Trade
Gasoline at a glance
Gasoline is a petroleum derivative, and it consists of a mixture of liquid hydrocarbons, the full name of this product is gasoline, and gasoline is a transparent material, and is used to operate machinery, especially cars, motorcycles, and lightweight trucks, and is also used as fuel for machinery and equipment used in construction work as it mixes Easily with carbonated air, in addition to producing a large amount of energy when burning, it is a highly flammable and dangerous liquid, and gasoline is produced by distillation of oil, and the United States of America is the primary consumer of gasoline, and most of the crude oil passes G in the Gulf states, and also spread all over Alaska and Mexico.
Gasoline is definitely a vital liquid. The world, as we know, will stop in the absence of gasoline, and the United States alone consumes approximately 130 billion gallons (about 500 billion liters) of gasoline annually!
The beginning of gasoline began in the year 1825 when the English scientist Michel Faraday discovered the benzene ring by isolating it from the gaseous oil and called it hydrogen bicarbonate.
Then, in 1833, German chemist Ilhard Meccherlich produced benzene by distilling benzoic acid from both benzene gum and lime, and named the benzene compound.
In 1845 the Englishman Charles Mansfield isolated gasoline from coal tar, and after four years of isolating gasoline, Charles Charles Mansfield began the first production of commercial gasoline.
Gasoline is produced by the oil distillation process, through which this method is separated by the components of the crude oil, and then the particles are broken down to smaller sizes by the thermal cracking process that is used under high pressure and temperature, and there is another way to obtain gasoline by polymerizing other hydrocarbon components Constituent of petroleum using temperature and pressure and the addition of some compounds that aid chemical reactions.
In the year 1920 the use of gasoline was limited to an industrial solvent to dissolve fats from different materials, and at the present time its most important uses as fuel for cars, and there are many attempts to reduce lead compounds in fuel, and is also used as a medium to obtain various chemical compounds, and the most important derivatives that are obtained from Benzene (styrene) and (phenol) which is used in the production of adhesives, and that gasoline is used in the manufacture of crackers, dyes, detergents, medicines, pesticides, and some types of drugs.
Gasoline production profits rose more than 150 percent in Asia, starting in June of this year due to production cuts and refining maintenance, but this may not continue as markets are expected to be hit by new supplies.
And China’s exports in June already saw up to 1.6 million tons, compared to May’s volumes of 850,000 tons.
Meanwhile, a new refinery in Malaysia, owned by Petroleum National Natal Berhad and Saudi Aramco, is expected to operate this year.
This, along with the huge refineries in China, is expected to add about 235,000 barrels of gasoline to the market.
The “petrol refining margin” is determined on the basis of both costs and profits. Where margin data is based on the average retail and wholesale price of gasoline at the state level for only one day of the week.
That is, the refining margins offered depend on the production of one barrel of gasoline from one barrel of crude oil.
Refining Margin – The refining margin (costs and profits) is calculated by subtracting the market price of crude oil from the wholesale price of gasoline, and the result is a total refining margin that includes the cost of operating the refinery in addition to the profits of the refining company,
An example of this: Looking at some places, gasoline refining margins fell in Europe for the first time in nearly five years, with an increase in the amount of stocks and weak demand in the Atlantic region. Since mid-October of this year, refineries in Europe have reduced the amount they produce Of gasoline and relied mostly on gasoline imports from the United States.
As for the distribution margin – it is calculated by (distribution costs, marketing costs, and profits) by subtracting the wholesale price of gasoline and taxes from the average weekly retail price.
Distribution margin can be positive or negative in value, and negative distribution margin indicates that some gasoline is sold at a loss, similar to refining margin, distribution margin also includes costs and profits of operating a retail gas station in addition to the different transportation and storage fees that are incurred once you move Gasoline from the charging station to the retailer.
Petrol is traded on the New York Mercantile Exchange (NYMEX) under the symbol GASOLINE
How is the price of gasoline determined?
Gasoline pricing method differs depending on the degree of quality, as there is a regular, medium, and high grade gasoline, and the octane gasoline is considered an excellent grade, because this type, which is characterized by the higher level of octane, is less in the possibility of ignition or explosion under pressure, and this matter is considered Important for high performance gasoline engines.
Gasoline is priced on the basis that approximately 65 percent of the price of gasoline is the actual crude oil, and an estimated 13 percent is the sum of the costs of transportation and refining, and then in the end, about 11 percent is added by the gas station that it sells to the consumer.
There is a fundamental difference in these prices between countries, as a rule, rich countries where prices rise, while poor countries and countries that produce and export oil, prices are much lower.
The only exception to this rule is the United States of America, which is considered one of the largest economically developed countries. However, fuel prices decline, and fees and taxes play a large role in the difference in prices between countries.
As a result, the retail prices of gasoline vary from country to country. In some cases, like Venezuela, the government subsidizes gasoline and thus people pay very little money for gasoline.
What are the factors that affect the price of gasoline?
There are a group of factors that affect the price of a gasoline commodity:
Supply and demand
The prices of commodities change with the change in the supply and demand for them, so the prices of goods rise in the event of a high state of demand for them, as well as the prices of commodities in the event of a decrease in the quantity of supply or inventory thereof, and vice versa occurs in the price of the commodity if the demand for it and the quantities offered from it decrease.
Commodities are often priced in US dollars, and the price of the commodity rises and falls, as the value of the US dollar rises and falls.
In the event that the dollar rises significantly against the basket of major currencies, as indicated by the US dollar index, this may cause gasoline prices to drop.
A number of commodities are produced in regions with political problems. For example, large quantities of crude oil are produced in countries near the Middle East, and this affects the trading price of the crude oil market.
The prosperity of any country is one of the main factors that affect the price of commodities, as the economic prosperity of the state reflects the purchasing power of the population of this country, and this effect is significant in the event that this country is one of the main countries to produce this commodity, or from the main countries consuming it.
Nature factors have a fundamental role in determining the prices of major commodities, as bad weather conditions have a major impact on the price of oil and its derivatives. In the event of a strong cold wave, the demand for energy products increases, and this demand leads to a rise in price.
Transport and storage costs
The cost of transportation and storage is not a major factor in moving commodity prices, but it is one of the factors that affect the determination of the commodity price. For example, in cases of increased demand for crude oil, the number of tankers used as storage containers doubles, in which case this procedure may affect On removing the available tankers from the transportation market, this leads to an increase in freight rates.
Gasoline trading via CFDs
Contracts for difference are contracts that are negotiable between two parties, one of which is the trader and the other broker, and trading is by exchanging the difference in the financial value at the beginning of the contract for the commodity, and its value at the date of the end of this contract, without buying and actually owning the main financial assets.
CFDs are financial derivatives through which a trader can benefit from the movement of the price of financial instruments up or down without actually having them.
Trading CFDs on commodities gives you access to the commodities market, by trading shares of a number of commodities such as gasoline, without having real ownership of the commodity for the asset you are trading in, and these are considered to be one of the most important advantages of CFD trading, because the trader is protected and has no Relation to any events that may occur to the commodity.
How contracts for difference work
- A trader chooses an asset, whether a stock, currency, or index, which the broker offers to trade as a CFD.
- The trader opens a position and specifies the sale or purchase, the amount he invests in, the leverage … and other criteria that differ according to the broker.
- Actually concluding a contract between the trader and the broker and agree to the opening price of the deal, and see if there are additional fees or not.
- The deal opens and is not closed to by the decision of the trader to close it, or if the trader identifies cases in which the deal is automatically closed, such as a loss order or a profit-taking, or in the event the contract period ends.
- In the case of closing the deal on gains, the broker pays the trader, while in the case of closing the deal on the loss, the broker charges the trader a fee.
Advantages of trading contracts for difference
Leverage: It is one of the most important advantages of trading contracts for difference, where using a small amount can open large-sized deals compared to owning the asset that is being traded.
If the price of a particular commodity reaches $ 100, you can invest in this commodity for only $ 50, and by using a 1:10 leverage you can trade on the same commodity for $ 500, and in this way you can open deals greater than the value of your balance with the leverage feature.
Possibility of profit from decline: whether market movements are moving up or down, you can benefit, as there are no restrictions at the beginning of the buying or selling process, in the case if you make the first sale and you think the prices are low then this is called “short selling” and in this case You can then buy it at a low price and record gains.
Trading a wide range of markets: Most CFD brokers provide the ability to trade on various assets in a wide sector of financial markets all over the world through direct trading platforms on the internet, for this diversity in investment tools (stocks, indices, currency and commodities …) CFDs provide a huge sector for many investment opportunities for all traders.
Lack of government fees: In the case of buying or selling in contracts for differences, this does not require any taxes that are paid such as documentation fees or stamps, and the reason for this is that the trader does not have the actual assets of what he is trading in, and despite this, the gains The taxes that he obtains from that circulation may be subject to taxes, but this occurs on the condition that it reaches a minimum level that is specified according to what is stipulated in the law of the country of residence.
The possibility of trading throughout the day: CFD trading is available 24 hours, five days a week, starting from Monday to Friday, and this makes the investor free to trade at any time he desires, whether the trader is full-time or a worker, and this is unlike traditional markets, A trader through CFDs can also continue trading even if the main markets are closed.
In the end, the trader must have sufficient knowledge and information about how financial derivatives such as contracts for difference and the size of potential gains and losses from their trading work, so that he can know that this type of investment is appropriate for him or not.
Why should you trade in gasoline with Q8Trade?
- Q8Trade provides leverage to increase the value of the capital you are trading with.
- When trading with Kuwait Trade, Q8 Trade provides you with an opportunity to trade in gasoline through contracts for difference, as this guarantees obtaining gains even if there is a decrease in prices.
- Q8Trade provides the possibility of exchanging while trading the gasoline commodity without any fees or stamps, through contracts for difference, due to the reason that you do not actually own the commodity.
- This broker offers many tools which you can benefit from when trading this commodity, such as real-time market prices, historical charts, all news related to the gasoline commodity, which can be a reason to affect its performance, fees Live charts, basic technical analysis and more.