Houston-The benchmark Argo ethanol market fell to a six-month low Thursday after weekly US Energy Information Administration data released Wednesday showed production and inventories surging beyond expectations.

A trader valued Argo at $1.3750/gal Thursday morning after it traded at $1.38/gal earlier, the lowest level since S&P Global Platts assessed the market at $1.3750/gal on January 31. Platts assessed spot Argo at $1.38775/gal on Wednesday, the lowest assessment since June 25.

One source said the figures in Wednesday's EIA report were "much higher than trade expectations."

US ethanol production averaged 1.100 million b/d in the week that ended August 3, up 36,000 b/d week on week and the second-highest weekly mark on record, according to the EIA.

Stocks added a total of 956,000 barrels, with much of that entering Gulf Coast storage facilities. The build was also well above market expectations.

The figures surprised many and were combined with bearish data for the oil complex.

"I think better weather helped as well as better rail performance," said another trader. "In July some plants, had to slow down because empty [rail cars] didn't return in time."

Cooler weather in the Midwest allowed plants to back off on running cooling equipment and increase output rates.

In the company's second-quarter 2018 earnings call, producer Green Plains said it would increase utilization rates at plants rather than the trimming seen earlier in the year.