Bloomberg News

Ethanol Futures Gain Second Day as Crude Oil, Gasoline Advance

October 24, 2011

Oct. 24 (Bloomberg) -- Ethanol futures advanced for a second day in Chicago as crude oil and gasoline gained on signs of increased fuel demand.

Futures rose after satellite images showed oil supplies at Cushing, Oklahoma, a key U.S. delivery point, dropped 2.6 percent between Oct. 21 and Oct. 18 and after a preliminary index signaled China’s manufacturing expanded in October. Ethanol is blended with gasoline to stretch supply and is part of U.S. plans to reduce reliance on crude oil.

“We’re showing strength across the board,” said Dan Flynn, a trader at PFG Best in Chicago. “We’re showing strength in everything that’s ethanol-based. It’s very supportive for the market.”

Denatured ethanol for November delivery climbed 1.9 cents, or 0.7 percent, to $2.674 a gallon on the Chicago Board of Trade. Futures have gained 12 percent this year.

In cash market trading, ethanol on the West Coast decreased 1.5 cents, or 0.5 percent, to $2.865 a gallon and in Chicago the additive slipped 0.5 cent to $2.75, according to data compiled by Bloomberg.

Ethanol in New York fell 0.5 cent to $2.85 a gallon and in the U.S. Gulf the biofuel slid 1 cent, or 0.4 percent, to $2.665.

Crude oil for December delivery surged $3.87, or 4.4 percent, to settle at $91.27 a barrel on the New York Mercantile Exchange, the highest level since Aug. 3.

Gasoline for November delivery gained 0.42 cent to settle at $2.6888 a gallon on the exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

--With assistance from Moming Zhou in New York. Editors: Charlotte Porter, 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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