NEW YORK (Reuters) - Prices of compliance credits used by oil companies to meet annual U.S. government biofuels requirements surged on Monday, as traders positioned themselves for the delayed implementation of the rule that set volumes for 2017.
Prices of renewable fuel (D6) Renewable Identification Number (RIN) credits jumped as high as 50 cents apiece in late trade on Monday, traders said. That was up from as low as 40 cents earlier in the session and from 37.5 to 39 cents on Friday as buying resumed after weeks of uncertainty had gripped the market and kept oil refiners to the sidelines.
The U.S. Environmental Protection Agency (EPA) in January delayed implementation of 30 regulations finalized in the last weeks of Barack Obama’s presidency, setting the deadline to implement them on March 21.
While the volumes were broadly expected to be moved forward without further change, refiners and others required to use biofuels have been holding back their buying in the opaque and thinly trading RIN market until the rule was implemented, brokers said.
Biomass-based diesel (D4) credits also jumped, trading up to $1.01 apiece, from 96.5 cents previously.
The Renewable Fuel Standard (RFS) requires oil companies blend increasing amounts of biofuels with gasoline and diesel. Firms can either blend the fuels or buy the RIN credits from others that have.
Price of the credits surged in late 2016 after the EPA under former President Barack Obama set targets for use that were more ambitious than previously expected.
They have since slumped, amid the delay and on signs that the new administration under President Donald Trump may consider overhauling the program. Carl Icahn, the billionaire investor and Trump’s special adviser on regulations, has been increasingly outspoken on his support to change the program to reduce the onus on refiners.
In a notice Friday, the EPA said the effectiveness date for the 2017 RFS was March 21, along with many of the other delayed rules.
Reporting by Chris Prentice; Editing by Chizu Nomiyama and Lisa Shumaker