Ethanol production hits 11-month high, discount to gas 22 cents

By Holly Jessen | May 28, 2013

The most recent data from the U.S. Energy Information Administration shows that ethanol production is ramping up, reaching the highest weekly average since the end of June. In the meantime, futures prices for ethanol were at nearly 22 cents less than RBOB gasoline, compared to a 20 cent discount last week.  

Ethanol production averaged 875,000 barrels per day or 36.75 million gallons daily in the week ending May 17. That’s an increase of 18,000 barrels per day from the previous week.

Ethanol stocks are down 1.5 percent from last week, landing at 16.2 million barrels. For the sixth time in seven weeks, zero barrels of ethanol were imported to the U.S. In addition, gasoline demand was at the highest of the year, sitting at an average of 369.2 million gallons daily.

At the close of market May 28, June RBOB futures contracts were at more than $2.85 cents, compared to $2.63 cents for June ethanol contracts, said Rick Kment, a Telvent DTN biofuels analyst. That’s a nearly 22 cent price spread, which has widened a few cents since close of market May 23. Weekly RBOB gas prices in April and May ranged from a high of nearly $2.91 cents on May 13 to a low of $2.77 on April 15. Weekly ethanol prices in the same time period were at a high of $2.70 on April 9 and a low of nearly $2.42 on April 1.