Ethanol futures rose for a third day in Chicago as gasoline gained, sparking optimism that refiners will use more of the fuel to pocket the spread between the two.
The grain-based additive rose 1 percent as gasoline advanced on speculation that U.S. employers added jobs last month. The biofuel is blended with gasoline to stretch supplies and meet federal mandates. Refiners receive a 45-cent tax credit for each gallon of ethanol mixed with gasoline in addition to the price difference between the two fuels.
“That’s definitely helping,” said Jerrod Kitt, an analyst at Linn Group in Chicago. “You’re seeing good demand from the blender.”
Denatured ethanol for July delivery rose 2.7 cents to settle at $2.761 a gallon on the Chicago Board of Trade. The contract expired today. Prices have gained 16 percent this year.
In cash market trading ethanol was unchanged in New York and on the West Coast at $2.785 a gallon and in the U.S. Gulf at $2.775, according to data compiled by Bloomberg.
Ethanol in Chicago rose 5.5 cents, or 2.1 percent, to $2.735 a gallon.
Based on today’s prices, ethanol traded at a 23.66-cent discount to gasoline.
Gasoline for August delivery gained 2.02 cents to settle at $2.9976 a gallon on the New York Mercantile Exchange. Prices have risen six of the past seven days, gaining 8 percent