Ethanol futures gained for a second day in Chicago on speculation that producers will temper output after stockpiles climbed to a record.
The biofuel rose 0.6 percent after an Energy Department report showed inventories climbed for a record ninth straight week to an all-time high of 21.5 million barrels last week. Production (DOETFETH) is down 3.6 percent from the record of 963,000 barrels a day set the week ended Dec. 30.
“We’re still building inventories, but at the same time everybody and their mother is talking about slowing down,” said Jerrod Kitt, an analyst at Linn Group in Chicago.
Denatured ethanol for March delivery increased 1.3 cents to $2.215 a gallon on the Chicago Board of Trade. Prices are down 12 percent from a year ago.
In cash market trading, ethanol was unchanged in the U.S Gulf at $2.225 a gallon and in New York the biofuel slipped 1 cent, or 0.4 percent, to $2.24, according to data compiled by Bloomberg.
Ethanol in Chicago jumped 1.5 cents, or 0.7 percent, to $2.175 a gallon and on the West Coast the additive rose 1 cent, or 0.4 percent, to $2.295.
The biofuel is blended with gasoline to augment supply and meet federal mandates.
There are 209 ethanol distilleries in the U.S., with the capacity to produce 14.8 billion gallons annually, according to the Renewable Fuels Association, a Washington-based trade group.
To contact the reporter on this story: Mario Parker in Chicago at firstname.lastname@example.org
To contact the editor responsible for this story: Dan Stets at email@example.com