Starting in the late 1970s, energy futures are relatively new in comparison to other commodity markets; they grew out of a need to control price volatility with risk management. Futures and options have been integral in keeping prices in check, while also letting the market move naturally with geopolitical events. Like with most commodity markets, supply and demand drive the energy markets. Unlike other commodity markets, supply and demand are greatly affected by international politics. To protect prices from quick dramatic swings, futures and options regulate how much prices can change in a given timeframe. This is to protect consumers and producers alike.
Crude Oil - Is an essential commodity that is used in nearly all aspects of modern society - gasoline, plastics, paint, detergent, medicine, make-up, etc. Because of this, crude oil and its price are always in high demand. Crude oil is not a uniform product and it is common practice to classify crudes based on three characteristics: gravity, sulfur content, and field of origin. The names of respective crude oils are indicative of these characteristics, such as West Texas Intermediate and Brent.
Natural Gas - Although most commodity markets are international, natural gas is primarily a domestic commodity. Oklahoma, Louisiana, Texas, and New Mexico account for eighty percent of the natural gas production in the U.S, while Mexico and Canada account for a small portion of the total consumed. Natural gas is measured by volume and heating quality. Demand peaks with winter's heating needs and summer's air conditioning usage.
RBOB (Reformulated Gasoline Blendstock for Oxygen Blending) - Mainly used for transporting ethanol, RBOB is a refined crude oil product. RBOB prices are heavily dependent on crude oil prices; this product is imported when crude oil producers do not have the means to refine it into gasoline. Though a crude oil producer makes more money off of the crude oil they sell, the producer must still pay higher prices to import gasoline.