Ethanol futures continue to edge lower as the shift lower which started midweek continues to develop as the momentum from weaker corn markets and recent weakness in energy markets is creating additional selling pressure across the ethanol market.
This pushed ethanol futures below $1.50 per gallon, with prices settling at $1.497 a gallon. The RBOB gasoline market turned into the main attraction of the day Thursday as the shutdown of a gasoline pipeline from the Gulf of Mexico based on a leak that is expected to have been found in Alabama has created aggressive buying activity through the entire energy market.
This not only created price surges in RBOB gasoline futures, but also pushed crude oil futures higher. The problem with this market shift, is that this issue is a short-term issue that is likely to be fixed in a matter of days if not shorter, and supplies back on line before we know it. Thus the price surge may create additional volatility which may cause even more downward pressure in the future than buyer support seen Thursday. October RBOB gasoline futures rallied nearly 7 cents per gallon, moving to $1.43 a gallon based on panic buying activity, but left the door open for increased market shifts later in the week to move in either direction.
Rick Kment can be reached at firstname.lastname@example.org
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