The US Energy Information Administration has raised its forecast for ethanol production as well as blending into the US gasoline pool in 2017, the EIA said Tuesday.
In its Short Term Energy Outlook for January, the EIA's production forecast for 2017 climbed 3,800 b/d from its December outlook. The forecast rose to 1.0046 million b/d from 1.0008 million b/d.
The EIA also forecast there will be an average of 940,000 b/d of fuel ethanol blended with gasoline in 2017, up from its December forecast of 937,000 b/d.
Domestic ethanol consumption has climbed as higher blending mandates encourage obligated parties to blend more ethanol into the gasoline pool. The four-week average of the ethanol blending rate averaged 9.99% in December, up from 9.38% in the same month of 2015.
The four-week rolling average of the ethanol blending rate is calculated by dividing the four-week rolling averages of the net ethanol input and gasoline demand.
Looking at the four-week averages eliminates some of the spikes in blending or gasoline demand that market participants see as questionable.
There has historically been a 10% blend wall, a limit on ethanol blending driven by infrastructure and policy constraints.
January's outlook is also the first that contains a forecast for 2018. The EIA sees ethanol production will average 1.0154 million b/d and blending will average 947,000 b/d in 2018.
