Feb. 22 (Bloomberg) -- Ethanol snapped the longest streak of gains against gasoline in five weeks as prices for the motor fuel rose for the first time in four days and production of the biofuel increased.
The spread widened 3.01 cents to 71.66 cents a gallon, based on futures settlement prices, the first expansion since Feb. 14. Gasoline prices recovered a day after the Energy Information Administration said supplies sank 2.88 million barrels and ethanol production grew for a third week.
"Production has been up a little bit," said Will Babler, a broker at Atten Babler Risk Management LLC in Galena, Illinois. "Margins have come off the lows. Some plants have increased run rates."
Denatured ethanol for March delivery rose 1.3 cents, or 0.6 percent, to $2.363 a gallon on the Chicago Board of Trade. Futures have advanced 7.9 percent this year.
March-delivery gasoline gained 4.31 cents, or 1.4 percent, to $3.0796 a gallon on the New York Mercantile Exchange.
Output’s third weekly gain is the longest since November, the Energy Department’s analytical arm said in the report yesterday. Production is down 17 percent from the record 963,000 barrels a day in December 2011 as companies navigate poor returns for the fuel because of higher corn prices.
Corn for March delivery fell 0.5 cent to $6.9025 a bushel in Chicago. One bushel makes at least 2.75 gallons of ethanol. Corn futures rose to a record $8.49 a bushel in August as drought in the Midwest cut yields.
The corn crush spread, representing gains or losses from turning a bushel of corn into ethanol, was minus 15 cents, compared with minus 16 cents yesterday and minus 35 cents on Dec. 31. The amount doesn’t include revenue from the sale of dried distillers’ grains, a byproduct of ethanol production, which can be fed to livestock.
Under a 2007 energy law, U.S. refiners are required to use 13.8 billion gallons of ethanol this year, up from 13.2 billion in 2012.