Maintenance season for US ethanol producers has come to a close, sources said Wednesday as Energy Information Administration data showed production rose 39,000 b/d week on week to 962,000 b/d in the week that ended May 6.
US producers typically take plants offline for maintenance in April, reducing production. Production reached a one-year low of 923,000 b/d in the week that ended April 29. The maintenance usually lasts three to five days.
Sources said the weeks during the heaviest maintenance period were a vital time for the market to eat into stocks that had hovered near record highs for much of 2016.
Stocks fell 949,000 barrels in the week that ended May 6 to 21.252 million barrels, the largest one-week decline since stocks fell 1.024 million barrels in the week that ended March 22, 2013.
US gasoline demand usually increases ahead of the summer driving season, when consumption reaches its annual peak. Increased gasoline demand means more ethanol is blended. The four-week rolling average of gasoline demand rose 6,000 b/d in the week that ended May 6 to 9.480 million b/d.
A source said the EIA data had been expected to show ethanol production of about 945,000 b/d.
But the higher-than-expected number did not weigh on prices as market players instead focused on the draw in stocks.
The front-month Chicago ethanol swap was heard trading for $1.51/gal shortly before the EIA data was released and then jumped to $1.53/gal after the data came out. It was last heard trading for $1.52/gal.
