Ethanol Follows Gasoline Higher After Iran Blocks Base Access

Source: Ksenia Galouchko • Bloomberg  • Posted: Thursday, February 23, 2012

Feb. 22 (Bloomberg) — Ethanol rose as gasoline rallied to the highest level since July after officials from the International Atomic Energy Agency were denied access to an Iranian military base.

The biofuel gained 0.8 percent as gasoline climbed 0.6 percent. Ethanol is blended with gasoline to augment supply and meet federal mandates.

“Ethanol is following its big brother, gasoline,” Peyton Feltus, president of Randolph Risk Management Inc. in Dallas, said by phone. “Gasoline has been definitely on a mission since the market realized that the refining capacity was going to be greatly reduced.”

Denatured ethanol for March delivery climbed 1.7 cents to $2.201 a gallon on the Chicago Board of Trade.

In cash market trading, ethanol in the Gulf Coast added 1 cent to $2.235 a gallon and New York prices gained 1 cent to $2.25, according to data compiled by Bloomberg. Ethanol in Chicago climbed 1 cent to $2.185 a gallon and on the West Coast added 1 cent to $2.305.

March-delivery gasoline rose 1.75 cents, or 0.6 percent, to settle at $3.0877 a gallon on the New York Mercantile Exchange, the highest price since July 29. Gasoline has gained 15 percent this year.

Sunoco Inc. and ConocoPhillips shut unprofitable refineries in the Philadelphia area late last year, and Sunoco has said it will close another plant if it can’t attract a buyer by July.