Gasoline Futures Rise to Five-Month High as RIN Prices Surge

March 8 (Bloomberg) -- Gasoline futures rose to a five- month high on concern that the availability of certificates that are bought to meet ethanol blending requirements will shrink.

Futures gained 2.6 percent. Prices have surged for Renewable Identification Numbers, or RINs, which refiners are required to get either by purchasing biofuel or paying for them in the market. U.S. refiners and blenders must use 13.8 billion gallons of ethanol, or 900,000 barrels a day, this year and a projected 14.4 billion next year to comply with the Renewable Fuels Standard. The cost for RINs in 2013 jumped to 90.5 cents a gallon yesterday, up from 7.1 cents Jan. 7.

“It’s a driving force in gasoline and diesel,” said Jeff Hove, vice president of RinAlliance in Iowa, a RIN management and compliance firm which also trades the credits for hundreds of blenders. “There’s this frantic desire to buy, because people can read the writing on the wall that there won’t be enough.”

Gasoline for April delivery gained 8.02 cents to $3.2035 a gallon on the New York Mercantile Exchange, the highest settlement since Sept. 28, on volume that was 52 percent above the 100-day average at 3:28 p.m. Gasoline rose 2.4 percent for the week.

The costs of RINs has climbed because of a poor corn crop and the “blend wall,” which results from stagnant gasoline demand and higher ethanol consumption targets, Hove said.

RIN Availability

“There was concern as RIN prices continue to soar whether RINs would even be available, resulting in an impact to supply and production of gasoline,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

The crack spread, or premium of April gasoline to West Texas Intermediate crude on Nymex, gained $2.98 to $42.60 a barrel. The spread versus Brent oil on ICE Futures Europe exchange jumped $3.67 to $23.70 a barrel.

Heating oil slipped as Brent prices sank after flows increased on a North Sea pipeline that had been shut for five days. Brent fell 30 cents to settle at $110.85 a barrel on ICE.

The Brent Pipeline System is “approaching” its targeted flow rate of 80,000 barrels a day, an official for Abu Dhabi National Energy Co., or Taqa, said by phone today. The system had an unplanned halt on March 2.

“Brent production has returned; Brent prices have fallen, dragging heating oil prices with it, as the U.S. exports significant amounts of diesel fuel back to Europe,” Lipow said.

Heating oil for April delivery declined 0.46 cent to settle at $2.9749 a gallon on Nymex, and rose 1.5 percent for the week. Volume was 6.8 percent above the 100-day average at 3:40 p.m. Heating oil’s premium to Brent grew a fourth day, gaining 11 cents to $14.10 a barrel.

Gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.712 a gallon, AAA said today on its website. It was the ninth consecutive drop.

--With Assistance from Mario Parker in Chicago

--With assistance from Konstantin Rozhnov in London and Mario Parker in Chicago. Editors: David Marino, Margot Habiby