If oil continues to fall, Petrobras could reduce prices soon, predicts UBS

Petrobras may soon reduce fuel prices in Brazil if the downward trend continues. The assessment was made by analysts at the Swiss bank UBS. In a report to clients, the institution argues that, given the recent drop in oil, the state-owned company would have space especially in diesel.

Yesterday, Acelen, a private refinery competing with Petrobras, reduced prices at the refinery in Bahia by up to 9% and already sells diesel cheaper than the national average of the state-owned company.

“If (oil) prices continue in this trend, we believe that Petrobras will be able to reduce prices soon”, quote analysts led by Luiz Carvalho, in São Paulo.

In the first six days of July, the barrel of Brent on the international market fell more than 15% on fears of recession in the US. Thus, it went from a level close to US$ 120 at the end of June to a value close to US$ 100 yesterday, the lowest level since April. UBS uses data from yesterday, Wednesday – therefore, before the rally seen this Thursday (read about today’s market below).

With the data up to Wednesday, the Swiss bank calculates that the price practiced by Petrobras in Paulínia (SP) and Itaqui (MA) would be around 5% above the international parity. In other words, it is more expensive to buy from Petrobras than to import from companies that follow the values ​​practiced in the United States.

For gasoline, UBS estimates that prices would still be lagged by about 15% — that is, below international parity. But analysts at the bank recognize that the Brazilian Association of Fuel Importers, Abicom, estimates that Petrobras’ gasoline would be 2% more expensive than par.

Yesterday, Petrobras’ competitor in Bahia, the oil company Acelen, announced a 9% price reduction at the refinery for diesel and a 5.2% drop for gasoline.

With this update, the private competitor starts to sell a liter of diesel type S10 for R$ 5.26 in Bahia, a value lower than the national average announced last month by Petrobras, of R$ 5.61. In the case of gasoline, Acelen reduced the liter to R$ 4.32, still above Petrobras’ national average of R$ 4.06.

Acelen is controlled by the Mubadala fund, from Abu Dhabi, and bought the then Landulpho Alves refinery on the outskirts of Salvador from Petobras. The facility was renamed the Mataripe refinery.

Oil rises this Thursday

This Thursday, July 7th, the oil market operates in a firm uptrend early this afternoon, with a rise of more than 5% in the barrel of the Brent type, which is once again trading close to US$ 105.

In a very volatile market, the commodity rises in the face of news published by the Bloomberg agency that China is preparing a new US$ 220 billion economic stimulus package. The initiative, according to Bloomberg, would be through the authorization for local governments to issue debt in the 2nd half of this year to finance new infrastructure projects – which could accelerate the second largest economy in the world.

Oil also rises on the back of fears that Russia could again reduce energy supplies to neighboring countries, especially in the Caspian Sea region.