New York — The New York Harbor ethanol market moved into its steepest contango structure since May 2017 as front-month barges weakened under multiple sources of pressure.
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"New York Harbor has plenty of inventory," said one source. "And in January the barge buyer could still end up receiving 2019 RINs."
January barges were offered 5.5 cents below February on Wednesday, the largest contango spread between front and second-month barges since May 2017.
S&P Global Platts assessed January New York Harbor at $1.4175/gal Tuesday, at a 4.75-cent discount to February's assessment of $1.4650/gal.
The Energy Information Administration Wednesday reported a 689,000-barrel increase in East Coast inventories in the week ended January 3, putting stocks in the region at their highest since late September 2019.
New York Harbor is the largest trading hub in the East Coast.
January product was also pressured by sellers carrying the option to transfer 2019 Renewable Identification Numbers through the end of the month. With the spread between 2019 D6 RINs and 2020 D6 RINs assessed at 6 cents on Tuesday.
With the value of 2019 RINs falling sharply as the compliance deadline nears, buyers have been less willing to buy ethanol that might carry the less-valuable vintage.
The US Environmental Protection Agency issues a RIN to track renewable fuel usage throughout the supply chain.
Refiners and importers – called "obligated parties" – use them to show the EPA that they have fulfilled their mandated government use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota.