US ethanol stocks for the week ended May 16 shed 312,000 barrels to a four-week low of 16.99 million barrels despite a production rise of 3,000 b/d to 925,000 b/d, Energy Information Administration data showed Wednesday. The stocks draw was unexpected by most sources after production and imports were strong in the previous reporting week. One trader source credited the draw to firm blending demand. Imports retreated to 11,000 b/d after hitting an eight-month high of 43,000 b/d in the previous week. In immediate reaction to the data, US ethanol prices turned sharply bullish, with values adding 5-10 cents/gal in prompt markets, sources said.
The four-week rolling average of gasoline demand rose 186,000 b/d to a seven-month high of 8.944 million b/d, and the four-week rolling average of the refiner and blender net ethanol input rose 9,000 b/d to 872,000 b/d. The weekly refiner and blender net ethanol input, however, nudged down 4,000 b/d to 886,000 b/d.
US ethanol stocks fell in all but one region. East Coast ethanol stocks moved down 23,000 barrels to 6.354 million barrels, ending an eight-week rise after hitting a 10-month high the previous week.
Gulf Coast stocks fell 181,000 barrels to 2.789 million barrels, and West Coast stocks declined 140,000 barrels to 1.81 million barrels. Rocky Mountain stocks were 14,000 barrels lower at 288,000 barrels. Midwest stocks, on the other hand, rose 46,000 barrels to 5.749 million barrels, rebounding from a five-month low.
As the proportional decline in blending demand was outweighed by the rising gasoline demand, the four-week rolling average of the ethanol blending rate — calculated by dividing the four-week rolling averages of the net ethanol input and gasoline demand — fell 0.1 percentage point to a 9.75%, 0.25 percentage point shy of the 10% “blend wall.”
The blend wall occurs when the maximum amount of the US gasoline pool has been blended to a level of 10% ethanol. Refiners then will be under pressure to run higher ethanol blends, buy renewable credits known as RINs or push for Congress to alter the Renewable Fuel Standard.