Anticipated summer demand shifts focus in ethanol, RBOB markets

By Rick Kment, Telvent DTN | March 08, 2017

The focus in early March is shifting away slightly from ethanol market moves and back to the recent shifts in RBOB gasoline prices. With spot-month contracts rolling from March to April, the RBOB gasoline futures price rallied 22 cents per gallon. This price spread between the two contracts represents traders turning their focus to growing consumer demand during the upcoming summer driving season. A portion of this market premium is expected to continue to hold through the early spring months, though April RBOB gasoline futures have turned sharply lower over the previous week.

There is growing uncertainty over whether expected upcoming buyer support will be able to offset the growth in overall supplies. Crude oil supplies remain the center of this "watch party" as prices remain stuck in a narrow trading range. The main concern in the energy market isn't the amount of demand expected to develop over the coming weeks and months, but rather whether production and storage levels can be held in check. Ethanol prices have seen minimal pressure over the last month, falling just 3 cents per gallon. But the growing concern in the RBOB gasoline market that additional pressure may develop between now and May is severely limiting buyer support in ethanol trade.  

Price comparison charts: 

Gasoline Prices (By Region)

REGION

SPOT

RACK

West Coast

$1.8162

$2.2310

Midwest   

$1.5331

$1.8329

East Coast

$1.4378

$1.4904

Front-Month Futures Price (RBOB) $1.6510

 

Ethanol Prices (By Region)

REGION

SPOT

RACK

West Coast

$1.6450

$1.7000

Midwest   

$1.4525

$1.7445

East Coast

$1.5600

$1.5900

Front-Month Futures Price (AC) $1.4770