Ethanol advanced as prices near a 12-week low stoked demand for the biofuel.
The biofuel gained a day after falling to the lowest price since June 29 and as its discount to gasoline expanded to the widest level in 16 weeks, making the fuel more attractive for blenders as they stand to pocket the difference between the two.
“It’s so oversold it’s ridiculous,” said Mike Blackford, a consultant at INTL FCStone in Des Moines, Iowa. “It’s finally getting a correction from what’s been a dismal week.”
Denatured ethanol for October delivery rose 1.3 cents, or 0.6 percent, to $2.26 a gallon on the Chicago Board of Trade. Futures have gained 2.6 percent this year.
In cash market trading, ethanol in New York surged 7 cents, or 3.1 percent, to $2.36 a gallon and in the U.S. Gulf the additive increased 5.5 cents, or 2.4 percent, to $2.34, data compiled by Bloomberg shows.
Ethanol in Chicago jumped 5 cents, or 2.3 percent, to $2.275 a gallon. On the West Coast the biofuel was unchanged at $2.39.
Gasoline for October delivery climbed 3.85 cents, or 1.3 percent, to $2.9425 a gallon on the Nymex. The contract covers reformulated gasoline, which is made to be blended with ethanol before delivery to filling stations.
The jump in gasoline expanded its premium to ethanol to 68.25 cents, the largest since May 31, from 65.7 yesterday.
Corn for December delivery added 2.25 cents, or 0.3 percent, to settle at $7.4825 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.