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Brazil’s refinery output sinks on year in May

Brazil’s output of refined-oil products tumbled year on year in May as weak growth in Latin America’s largest economy continued to undermine demand, National Petroleum Agency data showed.

Refineries produced 55.5 million barrels of diesel, gasoline and other products in May, a 4.9% downturn from 58.4 million barrels in May 2018, according to the agency, known as ANP. That was the second-consecutive monthly decline in the year-on-year comparison. May’s refined-product output, however, advanced 4.9% from 52.9 million barrels in April, the ANP said.

The most-recent downturn offset solid growth earlier in the year amid expectations for more-robust economic activity under the new administration of President Jair Bolsonaro, which took power January 1. Bolsonaro, however, has failed to push through much-needed pension reforms and made a series of policy missteps with lawmakers that have undercut the outlook for growth.

Economists and market analysts estimated 2019 GDP growth of 0.9% in the Brazilian Central Bank’s latest poll out Monday, down from forecasts for 3.5% growth at the start of the year. Refined-product consumption, especially for diesel and gasoline, typically tracks GDP.

Refined-product output has also been undermined by maintenance work at refineries operated by state-led oil producer and refiner Petrobras in the first half of the year. Petrobras shuttered the Refinaria Presidente Bernardes, or RPBC, in Sao Paulo earlier this year. RPBC, produces much of the country’s supply of jet fuel, was expected to be back at full production capacity in June.

Crude-oil throughput also reflected the declining activity, with processing sinking 6.3% year on year in May to 53.6 million barrels compared with 57.2 million barrels in May 2018, the ANP said. May’s processing was also down 0.2% from April’s 53.7 million barrels, the ANP said.

DIESEL DECLINE
Output of diesel, Brazil’s most-widely consumed refined product, sank for the first time in 13 months in the year-on-year comparison in May, the ANP data showed. The slide came despite efforts to stoke demand after independent truckers threatened a fresh strike to protest rising prices.

While the government declined to renew a subsidy on diesel prices, Petrobras reduced the frequency of fuel-price adjustments and Brazil pledged to adhere to a new freight table that ensured truckers’ margins.

Brazil produced 22.3 million barrels of diesel in May, a 7.9% tumble from 24.2 million barrels in May 2018, the ANP said. May’s diesel output, however, rose 1.8% from 21.9 million barrels in April, the ANP data showed.

Gasoline production also declined for a second-consecutive month in the year-on-year comparison as the sugarcane harvest accelerated, resulting in more-ample supplies and lower prices of biofuel alternative hydrous ethanol, the ANP data showed.

Brazil produced 12.2 million barrels of gasoline in May, which was down 7.6% from 13.2 million barrels in May 2018, the ANP said. May’s gasoline production, however, was up 0.8% from 12.1 million barrels in April, the ANP said.

Output of other refined products was mostly lower year on year in May, the ANP data showed.

Fuel oil output slipped 0.9% year on year to 5.82 million barrels in May versus 5.87 million barrels in the same month of 2018, the ANP data showed. Heavier rains earlier in 2019 filled dam reservoirs, reducing the need to use thermal power plants to meet electricity demand.

LPG production sank 3.5% year on year in May to 3.89 million barrels, down from 4.03 million barrels in May 2018, the ANP said. LPG is primarily used to power cooking stoves in remote or rural areas not served by natural gas distribution networks.

Jet fuel output, meanwhile, advanced 2.0% year on year in May to 3.55 million barrels, up from 3.48 million barrels in May 2018, the ANP said.
Source: Platts

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