Ethanol Weakens Against Gasoline on Above Average Stockpiles

Ethanol weakened against gasoline for a third day after a government report showed higher-than- normal stockpiles of the fuel.

The spread widened 2.11 cents after the Energy Information Administration said stockpiles in the week ended Jan. 18 totaled 20 million barrels, 1.4 percent higher than a year earlier and the highest for this time of year since the Energy Department’s statistical arm began tracking weekly data in June 2010. Gasoline advanced as inventories declined for the first time in nine weeks.

“There’s plenty of supply,” said Terry Reilly, a senior commodity analyst at Chicago-based Futures International. “Even though the stock number was down in the report, stocks are ample.”

The grain-based additive was 48.09 cents cheaper than gasoline, based on prompt-month contracts for both commodities, the widest since Jan. 10. The spread was 45.98 cents yesterday.

Denatured ethanol for February delivery rose 0.8 cent, or 0.3 percent, to $2.382 a gallon on the Chicago Board of Trade. Prices have advanced 9.5 percent in the past year.

Gasoline for February delivery climbed 2.91 cents, or 1 percent, to $2.8629 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.

Cash Ethanol

In cash market trading, ethanol was unchanged in the U.S. Gulf at $2.43 a gallon and on the West Coast the additive decreased 1 cent, or 0.4 percent, to $2.57, data compiled by Bloomberg show.

Ethanol in Chicago rose 1 cent, or 0.4 percent, to $2.385 a gallon and in New York the biofuel slipped 0.5 cent to $2.48.

Corn for March delivery advanced 3.5 cents, or 0.5 percent, to $7.2425 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.

Based on March contracts for corn and ethanol, producers are losing 24 cents on each gallon of the fuel made, up from 23 cents yesterday, according to data compiled by Bloomberg. The figures exclude the revenue that can be made from the sale of dried distillers’ grains, a byproduct of ethanol production that can be fed to livestock.

Ethanol production rose 1 percent to an average of 792,000 barrels a day, rebounding from the lowest level since the EIA started tracking the data.

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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