Ethanol spot prices have increased steadily since early February. By late March, New York Harbor (NYH) spot ethanol prices exceeded prices for RBOB (the petroleum component of gasoline) by more than $1 per gallon. Ethanol spot prices in Chicago and Gulf Coast markets also rose above NYH RBOB prices. The premium of NYH over Chicago spot ethanol prices, which had averaged roughly 25 cents per gallon in January, close to the typical transportation costs of moving ethanol from production centers in the Midwest to terminals on the East Coast in recent years, widened to $1 per gallon in early March. Logistical constraints in and around ethanol production centers in the Midwest, mainly involving railroads on which approximately 70% of ethanol is shipped, appear to be a key factor driving recent prices.
Ethanol futures prices suggest that market participants expect the recent price increase to be short-lived. The Chicago Board of Trade (CBOT) ethanol futures curve is heavily backwardated, meaning near-term contracts are selling at a premium to longer-term contracts. On March 31, the futures contract price for May 2014 delivery was more than $1 per gallon below the Chicago spot price for immediate delivery. Rail system conditions appear to be improving. In addition, the recent ethanol price increase has driven ethanol operating margins and crush spreads to their highest values in recent years, providing a strong incentive for increased ethanol production rates over the coming weeks, according to EIA.
Crude Oil --
May 2014 WTI crude oil opened this morning at $99.29 -- $1.01 below the same time last week. Next support is at $98.80 and $97.00. A move back above $102.25 would open the door to upside risk to $104.23 and the March high of $104.48. April 14 heating oil opened today at $2.91.
May 2014 Brent crude oil futures opened at $104.97 -- $2.60 lower on the week. Next support lies at $102.64 and a move below that level would clear the way to bears' target of $100.98. Tough resistance lies at $110.33 and $111.32 along the way to $116.50.
The WTI/Brent crude spread narrowed $1.27 on the week to $5.68 at the open, with Brent at a premium.
- U.S. crude inventories fell 2.4 million barrels (mmbl) to 380.1 mmbl -- now 8.5 mmbl below year-ago.
- Gasoline inventories fell 1.6 mmbl to 215.60 mmbl -- 5.0 mmbl below year-ago.
- Distillate stocks firmed 0.6 mmbl to 113.0 mmbl -- steady with year-ago.
- National propane stocks gained 0.910 mmbl to 26.568 mmbl -- 13.169 mmbl below year-ago.
Highway Fuels --
Gasoline firms, highway diesel softens.
The U.S. average retail price of regular gasoline increased by three cents this week to $3.58 per gallon as of March 31, 2014, down seven cents from this time last year. The Midwest had the largest price increase, up four cents to $3.59 per gallon. The East Coast and West Coast prices each increased three cents, to $3.56 and $3.85 per gallon respectively. The Gulf Coast price increased by two cents to $3.34 per gallon. The Rocky Mountain price decreased by a penny to $3.45 per gallon, according to EIA.
The national average diesel fuel price decreased by a penny to $3.98 per gallon, two cents less than the same time last year. Diesel fuel prices decreased in all regions except on the Gulf Coast, where the price remained flat at $3.80 per gallon. The largest price decrease for diesel fuel was on the East Coast, which fell by just over two cents to $4.09 per gallon, but is still the highest price in the nation. The Midwest and West Coast prices each decreased by two cents, to $3.96 and $3.99 per gallon, with the West Coast below $4 per gallon for the first time in seven weeks. The Rocky Mountain diesel fuel price decreased by less than a penny, but remains at $3.98 per gallon for a second week, according to EIA.
Look for information and statistics on LP and Farm Diesel in our weekly 'Farm Fuels in Focus' report.
Graphs and indicated text provided by EIA.