US oil rigs take giant leap forward during a week of higher post-OPEC prices

S&P Global Platts Monday assessed Chicago Argo ethanol at a nearly six-month high, as low stocks and robust exports continued to support the market while feedstock corn futures rallied. Argo, a benchmark for physical US ethanol, was $1.71/gal Monday, the product's highest level since June 14 when it was $1.7175/gal.

It marched higher last week thanks to bullish data from the Energy Information Administration.

The weekly EIA data showed domestic stocks shed 504,000 barrels in the week ended November 25. Market participants had expected a modest build, so the decline helped prices strengthen.

Stocks found relief as robust exports prompted market participants to dip into storage as producers make more export-grade ethanol. Sources said the US exported around 90,000 b/d in November, with December around the same volume.

Production also remained under control. Following seasonal maintenance, production rates were expected to race past 1.020 million b/d. But the past three weeks have all seen small declines in run rates.

Part of it could have to do with export-grade ethanol taking longer to produce, forcing plants to slow down production. But some plants could be experiencing late turnarounds.

Ethanol also found support with the crude oil complex. OPEC last Wednesday announced a deal to cut crude oil production, sending the crude complex higher. Ethanol found support from NYMEX RBOB gasoline futures. The front-month contract climbed 11.37 cents on the day of the announcement and has continued its bullish momentum since, only cooling on Monday as fell 16 points.

Monday also saw feedstock corn futures rally. The front-month CBOT corn futures contract rose 12 cents Monday to $3.4950/bushel. The soy complex was higher for much of the day, lending support to corn.