The premium RBOB gasoline has held to the ethanol market over the last two weeks has weakened over 30 cents per gallon, only to regain most of it in the last two trading sessions. There are several things at play here in this most recent shift in price spreads. First of all, March RBOB gasoline going off the board Thursday automatically increased the front-month RBOB gasoline price by 25 cents per gallon. That alone accounts for most of the return to the wide price spread between the two markets. But in the last week, the RBOB gasoline market has also lost most of the momentum seen earlier in the year as traders are focusing on refiners coming back on line following scheduled maintenance. This should increase overall supplies and inventory levels through the coming weeks, and ease pressure on most markets. Ethanol prices are gaining moderately following renewed corn price support as well as inventory reductions. Even if price shifts are not as wide as seen in the last two weeks, major adjustments to the ethanol to RBOB gasoline price spread are likely through the rest of the spring.
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