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  • bluecheese4u bluecheese4u Aug 28, 2013 2:11 PM Flag

    Ethanol’s Discount to Gasoline Widens on Middle East Concern

    Ethanol’s Discount to Gasoline Widens on Middle East Concern

    Mario Parker August 28, 2013
    Bloomberg News

    Ethanol’s discount to gasoline expanded as the motor fuel surged on concern the U.S. may strike Syria and disrupt fuel supply in the region and on speculation higher prices for the additive will quell demand.

    The spread, or price difference, widened 1.49 cents to 57.6 cents a gallon at 11:56 a.m. New York time even as an Energy Information Administration report showed output last week fell 2.8 percent to 820,000 barrels a day, the lowest since March 29, and supply in the so-called PADD 2 region, which covers the Midwest, dropped to the lowest level on record.

    “Ethanol’s really been climbing,” said Will Babler, a broker at Atten Batten Risk Management LLC in Galena, Illinois. “It’s baked in. That may be the disconnect you see.”

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    Denatured ethanol for September delivery rose 3.2 cents, or 1.3 percent, to $2.505 a gallon on the Chicago Board of Trade. Futures have gained 14 percent this year and are pace for the first monthly gain since May and the largest since January.

    Gasoline for September delivery increased 4.69 cents, or 1.5 percent, to $3.081 a gallon on the New York Mercantile Exchange. The contract covers reformulated gasoline, made to be blended with ethanol before delivery to filling stations.

    “The significant slowdown in production and the large draw in PADD 2 inventories seem to support recent speculation that may ethanol plants are shutting down for summer maintenance,” said Michael Breitenbach, a broker and director of research at Blue Ocean Brokerage LLC in New York.

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    Stockpiles, Imports

    Overall ethanol stockpiles fell 1.4 percent to 16.3 million barrels, the lowest level since July 5, data from the Energy Department’s statistical arm show.

    Imports of the biofuel sank 79 percent to 4,000 barrels a day, a third week of d

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