May 16 (Bloomberg) -- Ethanol advanced the most in more than three weeks on speculation that a supply glut is easing.
Futures rose for a second day after the Energy Department said stockpiles slid 3.5 percent to 20.6 million barrels in the week ended May 11, the lowest amount since Jan. 27. Production of conventional gasoline mixed with the biofuel, a proxy for demand, climbed 2.4 percent to a record 5.4 million barrels a day, according to the department.
“Although today’s DOE production numbers did creep above 900 for the first time since early March, ethanol inventories are much less oversupplied these days,” said Michael Breitenbach, an analyst and trader at Blue Ocean Brokerage LLC in New York.
Denatured ethanol for June delivery rose 4.3 cents, or 2 percent, to settle at $2.17 a gallon on the Chicago Board of Trade, the highest price since May 8 and the biggest one day gain since April 19. Ethanol has fallen 1.5 percent this year.
Production expanded 0.8 percent to 904,000 barrels a day last week, the Energy Department said, the highest level since March 2.
In spot market trading, ethanol in the U.S. Gulf jumped 5 cents, or 2.3 percent, to $2.205 a gallon and in Chicago the additive increased 4.5 cents, or 2.2 percent, to $2.135, according to data compiled by Bloomberg.
Ethanol in New York added 3.5 cents, or 1.6 percent, to $2.185 a gallon and on the West Coast the biofuel gained 1.5 cents, or 0.7 percent, to $2.29.
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