Northern California ethanol prices for prompt delivery soared to a five-week high Wednesday as two aggressive buyers entered the market short on product, sources said.
Platts' Northern California rail car ethanol for prompt delivery was assessed 10 cents higher at $2.79/gal, the highest level since April 22, when it was $2.81/gal.
"There were two guys that started buying early," one broker source said. "They were lifting everything that was offered for nearly an hour then we hit a wall."
After being assessed 6 cents higher at $2.69/gal on Tuesday, the first trade for Northern California ethanol for this-week-shipment was reported at $2.71/gal Wednesday.
Following the initial trade, trades were heard at $2.73/gal, $2.75/gal, $2.78/gal and it was then bid at that level, with the best offer last heard at $2.81/gal.
The assessment has soared 69 cents since hitting a three-month low of $2.10/gal on May 6, when market participants believed supplies were being adequately replenished in every US region.
"Supplies are tight out there," one Midwest ethanol trader said. "Especially after the Memorial Day weekend."
For the week that ended May 16, West Coast stocks declined 140,000 barrels to a five-week low of 1.81 million barrels, Energy Information Administration data showed. US ethanol stocks shed 312,000 barrels to slip to a four-week low of 16.99 million barrels despite a production rise of 3,000 b/d to 925,000 b/d, the data showed.
Sources expect the data for the week that ended May 23 -- to be released Thursday -- to show even more severely depleted supplies on the West Coast, which the EIA designates as PADD V.
