Bloomberg News

Ethanol Rises Against Gasoline on Signs of Higher Export Demand

May 07, 2013

Ethanol advanced against gasoline on speculation higher export demand is tightening supply along the U.S. East Coast.

The spread, or price difference, contracted 7.43 cents to 27.04 cents a gallon as ethanol stockpiles in New York Harbor in the week ended April 26 dropped to a record low 5.6 million barrels, data from the Energy Information Administration show, even as total gasoline demand trails year-earlier levels. Renewable Identification Numbers were mixed.

“Some of these guys must be exporting,” said Michael Slider, director of business development at Fauser Energy Resources in Oregon, Illinois. “Some of the storage on the East Coast has been going on ships.”

Denatured ethanol for June delivery rose 4.2 cents, or 1.7 percent, to $2.563 a gallon on the Chicago Board of Trade. Futures have gained 16 percent in the past year.

Gasoline for June delivery slipped 3.23 cents, or 1.1 percent, to $2.8334 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

Ethanol-blended gasoline made up about 96 percent of the total U.S. gasoline supply in the week ended April 26, up from 93 percent the previous week and the most since April 5, EIA said in a May 1 report.

Lower Supply

Overall stockpiles of the fuel fell 3.2 percent to 17 million barrels, the lowest since November 2011, data from the Energy Department’s analytical arm show.

“The plants are up and running well and inventories have drawn,” Slider said. “Gasoline demand isn’t anything to write home about.”

Ethanol exports from PADD 1, which covers the East Coast, in February were the highest since August, EIA data show.

Production of the fuel has rebounded 11 percent to 857,000 barrels a day from a low of 770,000 in the week ended Jan. 25, the lowest in records going back to June 2010.

Ethanol is made from corn in the U.S., with one bushel distilling into at least 2.75 gallons of the renewable fuel.

Corn for July delivery rose 3.5 cents to $6.40 a bushel in Chicago.

The corn crush spread for July was 14 cents a gallon, up from 11 cents yesterday. That compares with minus 35 cents on Dec. 31. The amount doesn’t include revenue from the sale of dried distillers’ grains, a byproduct of ethanol production, which can be fed to livestock.

Ethanol Certificates

Corn-based ethanol RINs, the certificates assigned to each gallon of biofuel that are submitted to the government to show compliance with the law and also traded among refiners, rose 2.6 percent to 79.5 cents, the highest since April 10, data compiled by Bloomberg show.

Advanced RINs, which cover biodiesel and Brazilian sugarcane-based ethanol, increased 0.6 percent to 88 cents.

There were no ethanol imports in the week ended April 16 compared with 39,000 barrels a day the previous week, EIA data show.

Anhydrous ethanol in Sao Paulo cost $2.58 a gallon as of April 26, data compiled by Bloomberg show.

The Energy Department is scheduled to release the latest import, production and supply data tomorrow at 10:30 a.m. in Washington.

In cash market trading, ethanol in New York Harbor gained 13 cents to $2.90 a gallon, the highest since Nov. 29, 2011; in Chicago the additive rose 5 cents to $2.70, the costliest since Dec. 1, 2011; in the U.S. Gulf the biofuel climbed 5 cents to $2.76, also the highest since December 2011; and on the West Coast, prices added 2.5 cents to $2.80 a gallon, data compiled by Bloomberg show.

West Coast ethanol’s premium over the Gulf dwindled 2.5 cents to 4 cents, the thinnest since Dec. 20, while Chicago’s discount to New York Harbor ballooned 8 cents to 20 cents, the widest since April 26.

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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