Sometimes the market “prices in” so-called fundamental factors. For example, if the U.S. government is expected to show crude stock supplies falling by a large amount, the market might slowly crawl higher in advance of the weekly inventory report as opposed to rallying sharply when expectations prove true. On the other hand, a quickly developing weather event can lead to immediate price swings. And the market also responds to seasonal trends. For example, the RBOB market tends to peak ahead of summer driving season. The ULSD contract (a proxy for heating oil) will often spike on the first chilly fall day. Some terminology you will hear when people talk about the market: • Bullish – the market is rising • Bearish – the market is weakening • Oversold – the market is rising • Overbought – the market is weakening But, What Does This Mean in a Market That Trades ACTUAL Barrels? The NYMEX is the first column in your price equation. If RBOB futures go higher, it will send gasoline prices up right through the fuel chain – unless the next link in the chain does something to counteract it. Next, we’ll look closer at how the spot market reacts to the NYMEX and go into spot basis in greater detail. Fuel Buying 101, Part 1: Futures and Spot Markets | Oil Price Information Service (OPIS) © 2020, all rights reserved 7