Brazil's Petrobras to cut diesel prices by 9%

Credit: REUTERS/UESLEI MARCELINO

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SAO PAULO, Feb 7 (Reuters) - Brazilian state-run oil company Petrobras PETR4.SA said on Tuesday it will loweraverage refinery gate diesel prices by nearly 9% starting Wednesday, marking the first price cut under new chief executive Jean Paul Prates.

Petroleo Brasileiro SA, as the company is formally known, said in a statement on its website that diesel prices would be reduced to 4.10 reais ($0.79) per liter from 4.50 reais, in line with some market expectations.

Petrobras in recent years has tracked global oil markets with its domestic prices, but investors fear Prates may dramatically change such fuel pricing policy as President Luiz Inacio Lula da Silva has repeatedly criticized it.

In its latest statement, the oil giant said the price cut comes as it looks to "balance" local and international markets. Gasoline prices remained unchanged.

The move, Petrobras' first diesel cut in two months, was already expected following a recent downward trend in global prices.

The logic behind the move is "fully consistent with market conditions," said StoneX analyst Pedro Shinzato, noting international diesel prices have been facing intense volatility since early 2022.

"Petrobras is catching up with a downward trend in import parity on lower international crack spreads," said Regis Cardoso, an analyst at Credit Suisse, adding he now sees local diesel prices at a 6% premium over import parity prices.

Gasoline prices currently trade at a 5% premium, he added.

Fuel importers association Abicom, meanwhile, said the cut could have been smaller as global prices are now back on the rise. Crude futures LCOc1 rose for a second-straight session on Tuesday, driven by optimism about recovering demand in China.

($1 = 5.1874 reais)

(Reporting by Gabriel Araujo and Marta Nogueira; Editing by Steven Grattan)

((Gabriel.Araujo2@thomsonreuters.com; +55 11 5644 7745;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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