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Chicago ethanol market at four-month high as turnarounds trim output

https://www.chemnet.com   Apr 14,2017 Platts
The Chicago paper ethanol market climbed Thursday to a four-month high, as maintenance season trimmed production rates while stocks fell.

The front-month Chicago ethanol swap was heard trading as high as $1.6850/gal in the morning. Thursday's trade was the highest level for the swap since S&P Global Platts assessed it at $1.73/gal on December 13. Platts assessed the swap at $1.6650/gal Wednesday.

Prices have risen for the last three weeks as market participants avoided adopting short positions ahead of turnaround season and higher demand from increased driving.

"You've got to feed a bull market every day," said one source. "We needed a sub 1 million b/d production number and we got it."


Weekly Energy Information Administration data released Wednesday showed production fell 33,000 b/d to a six-month low of 986,000 b/d in the week ended April 7.

Market participants had expected the decline as maintenance season ramped up. But the size of the drop surprised some sources.

Producers have added production capacity at plants over the past couple of years, pushing output to all-time highs early this year. That left some wondering if maintenance would be able to pull output below 1 million b/d.

The lower production also eroded stockpiles. Ethanol stocks fell 802,000 barrels to 22.903 million barrels, the largest single-week decline in six months.

Stocks had reached the second-highest recorded level in the previous week, creating some concern about oversupply.
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