Bloomberg News

Ethanol Snaps Three-Day Streak of Gains on Consumption Concerns

October 26, 2011

Oct. 26 (Bloomberg) -- Ethanol futures snapped three days of gains in Chicago on concern demand is threatened by the European debt-crisis and after a government report showed lower gasoline consumption.

Futures fell as European leaders meet for a second summit in four days to try to reach an agreement to contain the debt crisis. An Energy Department report today showed that gasoline demand fell to the lowest level since January 2004. Ethanol is blended with the motor fuel to augment supplies.

“Everything else was lower here,” said Matt Janney, a trader at Citigroup Global Markets Inc. in Chicago. “Everyone’s hinging on what’s going on in Europe. In that report, gasoline demand was bearish and that’s a negative on the market.”

Denatured ethanol for November delivery slumped 0.8 cent, or 0.3 percent, to settle at $2.689 a gallon on the Chicago Board of Trade. The futures have gained 13 percent this year.

In cash market trading ethanol in the U.S. Gulf jumped 12 cents, or 4.5 percent, to $2.80 a gallon and in New York the biofuel gained 7 cents, or 2.5 percent, to $2.93, according to data compiled by Bloomberg.

Ethanol on the West Coast added 5.5 cents, or 1.9 percent, to $3 and in Chicago the additive increased 4 cents, or 1.5 percent, to $2.745.

Deliveries of gasoline to wholesalers declined 1.1 percent to 8.5 million barrels a day in the week ended Oct. 21, the Energy Department said.

Gasoline for November delivery dropped 4.82 cents, or 1.8 percent, to settle at $2.6516 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.

--With assistance from Barbara Powell in Dallas. Editors: Bill Banker, Charlotte Porter

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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