Ethanol Snaps Two-Day Losing Streak As Report Shows Supply Drops

Source: By Mario Parker, Bloomberg • Posted: Thursday, June 14, 2012

Ethanol futures snapped a two-day streak of losses after a government report showed increased demand and lower stockpiles.

Prices advanced after the Energy Department said inventories slumped 2.5 percent to 20.7 million barrels, the biggest drop and lowest level since May 11 while output jumped 1.8 percent to 920,000 barrels a day, the highest amount since Feb. 10 and the biggest weekly gain since April 27.

Production of conventional gasoline blended with ethanol, a measure of consumption beyond what’s mandated by the government, jumped 4.9 percent to a record 5.51 million barrels a day. That’s the biggest increase since the week ended June 10, 2011.

Denatured ethanol for July delivery gained 1.4 cents, or 0.7 percent, to settle at $2.05 a gallon on the Chicago Board of Trade. Prices have fallen 6.9 percent this year.

In spot market trading, ethanol in New York lost 3.5 cents, or 1.7 percent, to $2.045 a gallon and in Chicago the additive declined 2 cents, or 1 percent, to $1.99, according to data compiled by Bloomberg.

Ethanol in the U.S. Gulf sank 2 cents, or 1 percent, to $2.06 a gallon and on the West Coast the biofuel dropped 1.5 cents, or 0.7 percent, to $2.155.