Ethanol Falls After Two Days of Gains on Signs of Oversupply
Ethanol fell for the first time in three days on speculation the market is oversupplied.
Prices slipped a day after the Energy Department said inventories in the week ended Aug. 10 were 18.4 million barrels, up 4.9 percent from a year earlier. Output rose a third consecutive week to 819,000 barrels a day, the longest string of increases since May 18.
“Production was up,” said Ian Jackson, a trader at SCB & Associates LLC in Chicago. “That’s going to keep pressure on the market until we see some serious shutdowns.”
Denatured ethanol for September delivery fell 0.2 cent to settle at $2.587 a gallon on the Chicago Board of Trade. Prices have gained 17 percent this year.
In cash market trading, ethanol in New York was unchanged at $2.64 a gallon and in Chicago the additive lost 0.5 cent to $2.56, according to data compiled by Bloomberg.
Ethanol in the U.S. Gulf increased 0.5 cent to $2.63 and on the West Coast the additive dropped 1 cent to $2.745.
Production has fallen 15 percent from a record 963,000 barrels a day as companies temper operations because of more expensive corn prices caused by drought.
Corn for December delivery jumped 3.5 cents, or 0.4 percent, to $8.075 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol.
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