Bloomberg News

Ethanol Climbs Most in Eight Weeks on Economic Optimism, Demand

October 05, 2011

Oct. 5 (Bloomberg) -- Ethanol futures climbed the most in almost eight weeks in Chicago on signs of a stronger economy and after a report showed increased demand for the biofuel.

Futures gained 2.5 percent after an Energy Department report showed production of conventional gasoline blended with ethanol rose 2 percent, the most since June 10, to 5.16 million barrels a day, while gasoline stockpiles declined. Separately, ADP Employer Services reported that U.S. firms increased employment by 91,000, exceeding the 75,000 forecast in a Bloomberg News survey.

“Everything was kind of supporting it,” said Jerrod Kitt, an analyst at the Linn Group in Chicago. “The EIA demand numbers were up.”

Denatured ethanol for October delivery rose 6.2 cents to $2.52 a gallon on the Chicago Board of Trade, the biggest one- day gain since Aug. 11. Prices have climbed 6 percent this year. The contract expired today.

In cash market trading ethanol in New York surged 18 cents, or 7 percent, to $2.76 a gallon and on the West Coast the biofuel added 7 cents, or 2.7 percent, to $2.68, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf advanced 6 cents, or 2.4 percent, to $2.565 a gallon and in Chicago the additive climbed 2.5 cents, or 1 percent, to $2.50.

Crude oil for November delivery jumped $4.01, or 5.3 percent, to settle at $79.68 a barrel on the New York Mercantile Exchange.

Gasoline for October delivery soared 8.08 cents, or 3.3 percent, to settle at $2.5692 a gallon in New York. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

--Editors: Bill Banker, Richard Stubbe

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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