US DATA: EIA says ethanol production, stocks rebound week after sharp declines

Houston — US ethanol production averaged 958,000 b/d the week ended July 24, an increase of 50,000 b/d on week, data from the Energy Information Administration showed July 29.

Production was down 73,000 b/d year on year, but far exceeded market expectations.

US ethanol stocks also gained, rising 471,000 barrels week on week to 20.272 million barrels. The build also was above market expectations.

The bearish data came a week after the EIA report surprised market observers by showing the first production decline in 12 weeks and an extensive draw in stocks. Some market sources were wary of the latter number, saying the EIA did not count product that was in transit.

Inventories rose in four of the five defined US regions week on week. East Coast stocks grew by 224,000 barrels, or 3.81%, to end the week at 6.106 million barrels.

The Midwest region saw the second-largest build, gaining 105,000 barrels to 6.735 million barrels. The Midwest is home to most of the US' ethanol plants, and is a significant trading hub.

Gulf Coast stocks added 101,000 barrels to 4.452 million barrels. The Gulf Coast is the origin for most ethanol exports from the US as well as a major consumption hub.

West Coast inventories gained 41,000 barrels to 2.608 million barrels. The EIA reported 27,000 barrels of imports into the region. Ethanol imports typically flow into California, as imported sugarcane-based ethanol from Brazil generates more value from carbon credits under the state's Low Carbon Fuel Standard.

Gasoline demand increased on the week. The four-week rolling average of the refiner and blender net ethanol input rose by 6,000 b/d to 840,000 b/d, while the weekly average rose by 14,000 b/d to 853,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, increased by 62,000 b/d to 8.693 million b/d. The weekly average rose by 259,000 b/d to 8.809 million b/d.

The four-week rolling average of the ethanol blending rate, calculated by dividing the refiner and blender ethanol input by gasoline demand, was steady at 9.66%.