US DATA: EIA says ethanol production drops steeply, stocks build

Houston — US ethanol production averaged 957,000 b/d in the week ended Dec. 11, 34,000 b/d lower on the week and down 124,000 b/d year on year, Energy Information Administration data showed Dec. 16.

Production was at the low end of market expectations and comes a week after production reached the highest level since the week ended March 20.

US ethanol stocks added 867,000 barrels to 22.950 million barrels, the seventh straight build and the highest inventory level since the week ended May 22. The increase exceeded market expectations.

The largest increase came in the East Coast region, where inventories grew by 396,000 barrels.

Gulf Coast stocks rose by 310,000 barrels. The Gulf Coast is the most common origin for exports but also hosts large consumption hubs.

West Coast inventories gained 218,000 barrels as the EIA reported 15,000 b/d of imports on the week. 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.

The Midwest region, home to most of the ethanol plants in the US and a significant trading hub, showed the only draw in stocks. Inventories in the region fell by 56,000 barrels. In recent weeks, the Midwest has seen the most liquid ethanol markets, such as Chicago Argo and R11.

The four-week rolling average of the refiner and blender net ethanol input fell by 2,000 b/d to 791,000 b/d, while the weekly average rose 47,000 at 802,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, fell 71,000 b/d to 7.919 million b/d. The weekly average increased by 375,000 b/d to 7.975 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, rose to 9.99% from 9.92%.