Ethanol's Discount To Gasoline Could Pressure Refiners

EasyBourse.com
By Naureen S. Malik Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Corn-ethanol futures are trading at their biggest discount to gasoline futures since the summer of 2008, which could encourage more biofuel blending and pressure the margins of oil refiners.

Over the past several weeks, gasoline prices have surged during the usual seasonal rally ahead of the peak summer driving season. Meanwhile, ethanol prices have been dragged lower by rising output of the biofuel and a drop in corn prices amid ample supplies and a drop in demand for animal feed.

Attractive ethanol prices could push fuel retailers, the middlemen who deliver fuel and even some refiners to blend more of the biofuel, which would damp the recovery in gasoline demand that is crawling back from depressed levels. Refiners are required to blend a certain amount of ethanol into their gasoline or buy credits to meet the mandate.

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