RVO rises to new high as HOBO widens

RIN credit prices rose to fresh highs today with support from lower biodiesel production margins, lifting the Argus Renewable Volume Obligation (RVO) to an all-time high for the second day in a row.

The RVO, an estimate for the cost of complying with the US Renewable Fuel Standard (RFS), rose by 0.24¢/USG to 18.16¢/USG day on day. Credit gains were driven by the heating oil-soybean oil (HOBO) spread, an indicator of biodiesel production margins. The HOBO spread fell by 0.15¢/USG to -323¢/USG, it's lowest recorded level by Argus as CBOT soybean oil futures' rise outpaced the increase in Nymex heating oil futures. The HOBO spread has fallen for ten of the last 12 sessions.

Biomass-based diesel D4 RINs with current year vintage increased by 2¢/RIN to 160¢/RIN, their highest since early January 2012. Values rose as biodiesel sellers raised offers in order to recoup losses from poor biodiesel margins.

Current year ethanol D6 credits followed the D4 gains, increasing by 2.25¢/RIN to 150.75¢/RIN, striking a new all-time high.

RINs are tradable credits that represent renewable fuels blended with conventional ones and are used to prove compliance with the RFS.

By Thom Dwyer