April was a policy-driven month with significant intra-month volatility that the flat monthly averages obscure. The EPA Set 2 RFS final rule at record-high 25.82 billion RINs was the dominant driver, immediately lifting compliance-buying demand across the complex before a ULSD-led mid-month selloff erased the gains, with a full recovery into month-end reinforced by the BTC Extension Act introduction. Feedstocks moved sharply against producers, UCO +20% MoM on aggressive RFS-driven procurement of Chinese import volumes, soybean oil +5.86% MoM on domestic mandate demand, compressing production margins to full policy dependency. Curves flattened across all products as deferred months repriced the forward mandate demand while the prompt held or eased, with backwardation persisting at month-end signaling the market does not believe the required 60%+ production increase materializes quickly. RD California was the notable underperformer at -3.41% MoM, isolated by LCFS credit softness rather than any complex-wide dynamic.
Price Trends
- The EPA "Set 2" RFS final rule published Apr 1 set record-high 2026 RVO obligations at 25.82 billion RINs, requiring a 60%+ increase in biodiesel and renewable diesel production vs 2025, driving compliance-buying demand that lifted all four hubs to monthly highs on Apr 7 (Chicago $3.977/gal, East Coast $4.427/gal, Gulf Coast $4.077/gal, California $4.177/gal).
- The mid-month selloff, triggered by ceasefire signals in the Middle East conflict pulling the ULSD complex lower, drove the largest single-day decline of the month on Apr 8 (-$0.669/gal across all hubs simultaneously), with all four products hitting monthly lows on Apr 17 (Chicago $2.897/gal, East Coast $3.347/gal, Gulf Coast $2.997/gal, California $3.097/gal); the $1.080/gal intra-month range was the dominant feature of April.
- B99 closed above its April open across all four hubs despite the mid-month trough, as the ceasefire proved fragile and ULSD firmed into month-end, reinforced by the introduction of the bipartisan Biodiesel Tax Credit Extension Act of 2026 on Apr 29, which would reinstate the $1/gal BTC through 2029 and improve downstream blending economics.
Feedstock Trends
- Record RFS Set 2 RVO volumes drove aggressive procurement of UCO as a qualifying feedstock; US importers pulled larger Chinese UCO volumes into the Gulf Coast, tightening the available pool and lifting USGC swap prices.
- RFS Set 2 mandate supporting demand for domestic feedstocks, consistent with EPA's stated intent to drive soybean oil demand for American farmers.
Cross-Commodity Dynamics
- RD California's underperformance was driven by LCFS credit softness: the California Physical LCFS credit averaged $63.87/MT vs $65.35/MT in March, compressing the California-specific premium that RD commands over B99 given its higher carbon intensity credit value.
- B99 averaged $3.465/gal (Chicago), $3.880/gal (East Coast), $3.530/gal (Gulf Coast), and $3.630/gal (California) in April. The D4 RIN averaged $1.754/gal over the same period, representing approximately 45-51% of the B99 flat price across hubs, the compliance credit as a share of the physical price reflects the degree to which B99 blending economics are policy-dependent.
- B100 averaged $6.095/gal (Chicago), $6.511/gal (East Coast), $6.161/gal (Gulf Coast), and $6.261/gal (California) in April. The D4 RIN averaged $1.754/gal, representing approximately 27-29% of the B100 flat price, a lower share than in B99 because B100 carries additional production and feedstock cost premium above the compliance value.
Curve Structure
- Curve remains in backwardation at month end across all tenors, with the prompt still commanding a +$0.657/gal premium over M6; the persistence of backwardation reflects continued near-term supply constraint for RD despite the prompt easing, consistent with a market that views the 60%+ production increase required under Set 2 as a deferred rather than immediate supply response.
- Curve remains in backwardation at month end across all hubs and all tenors; M1-M6 spreads of +$0.594 to +$0.657/gal at month close represent roughly half the opening level, consistent with a market pricing near-term physical tightness against an improving forward supply outlook as mandate volumes incentivize production ramp-up.
Note: All figures, prices and market activity referenced in this report are based on the period 1 to 29 April 2026.
