NEW YORK (AP) - Shares of ethanol producers gained traction Wednesday as oil prices spiked and the price of corn, used to make the alternative fuel, declined.
In midday trading, a barrel of light, sweet crude jumped $1.48 to $64.41 on the New York Mercantile Exchange.
Crude briefly topped $68 a barrel in electronic trading a day earlier amid concerns over tensions between the West and Iran, a major oil-producing nation. A government report on Wednesday showing an unexpected drop in crude oil inventories also bolstered prices.
Corn fell 4.4 cents to $3.88 a bushel on the Chicago Board of Trade.
Citigroup analyst David Driscoll projected an extended decline in corn prices, which have reached record heights in recent months on the back of rising demand for ethanol.
The U.S. Department of Agriculture reports spring plantings on Friday, and analysts largely expect to see a sharp increase in corn acreage compared with last year. More corn planted means more corn supply will likely reach the market, weather and all other influences being equal. That bodes for a decline in prices, Driscoll said.
Ethanol rose a penny to $2.31 a gallon on the Chicago Board of Trade.
Higher ethanol prices and lower corn costs can translate into wider margins for ethanol makers.
Shares of Archer Daniels Midland Co. jumped $1.23, or 3.4 percent, to $37.17 in midday trading on the New York Stock Exchange, while Verasun Energy Corp. shares picked up 48 cents, or 2.5 percent, at $19.55. Pacific Ethanol Inc. shares added 28 cents at $16.36 on the Nasdaq Stock Market.
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