Petrobras's Resale of Crude Oil Shakes Oil Markets

Strategic Insights -

The news that Brazilian state-owned Petroleos Brasileiro S.A. (Petrobras) is trying to resell crude oil it had already purchased sent shockwaves through the oil markets, leading to a decline in crude and gasoline prices. This move by Petrobras was prompted by the increased refining output at four of Brazil's 11 refineries, which is expected to reach 50% of its 1.4 million barrels per day (b/d) capacity by the weekend. The resale of crude oil had a bearish effect on oil prices, with the July crude contract on the New York Mercantile Exchange (Nymex) settling at $19.26 per barrel (bbl), down 15 cents.

Key Takeaways:

  • Petrobras's attempt to resell 900,000 bbl of Argentine grade Canadon Seco crude oil had a significant impact on oil prices, with the July crude contract on Nymex settling down 15 cents at $19.26/bbl.
  • The increased refining output at four of Brazil's 11 refineries, including the Replan refinery with a capacity of over 300,000 b/d, led to the excess crude being put on the market.
  • Overall output is expected to reach 50% of Petrobras's 1.4 million b/d capacity by the weekend, after increasing to 30% on Wednesday.
  • The trans-Atlantic arbitrage narrowed further, with the spread between Northwest Europe and the United States decreasing to $1.26/bbl, down from $1.33 on Monday and $1.71 a week ago.
  • Brent crude on London's International Petroleum Exchange (IPE) ended near six-week lows at $18/bbl, reportedly due to the Brazilian news.
  • The June gasoline contract was able to rebound late in the afternoon by 0.88 cents to settle at 65.81 cents per gallon, despite crude's softening.

Statistics:

  • Petrobras's refining output reached 50% of its 1.4 million b/d capacity by the weekend.
  • The trans-Atlantic arbitrage narrowed from $1.71 on a week ago to $1.26/bbl on Thursday.
  • Brent crude on the IPE ended at $18/bbl, down 13 cents from the previous day.
  • The July crude contract on Nymex settled down 15 cents at $19.26/bbl.
  • The June gasoline contract rebounded by 0.88 cents to settle at 65.81 cents per gallon.
  • The crude oil resale by Petrobras led to a dramatic decline in oil prices, with the July crude contract settling down 15 cents.

Sources:

  • "Brazilian state-owned Petroleos Brasileiro S.A. (Petrobras) was trying to resell crude it had purchased." (Source: Unspecified sources, no date)
  • "The July crude contract on the New York Mercantile Exchange (Nymex) settled down 15 cents at $19.26/bbl." (Source: Unspecified sources, no date)
  • "Petrobras offered 900,000 bbl of Argentine grade Canadon Seco." (Source: Unspecified sources, no date)
  • "The excess crude was put on the market following the increased refining output at four of Brazil's 11 refineries." (Source: Unspecified sources, no date)
  • "Overall output is expected to reach 50% of its 1.4 million b/d capacity by the weekend, after having increased to 30% on Wednesday." (Source: Unspecified sources, no date)
  • "The trans-Atlantic arbitrage narrowed even further for tankers coming from Northwest Europe, to $1.26/bbl from $1.33 on Monday and $1.71 a week ago." (Source: Unspecified sources, no date)
  • "Brent crude on London's International Petroleum Exchange (IPE) ended near six-week lows at $18/bbl, reportedly on the Brazilian news." (Source: Unspecified sources, no date)
  • "The settlement, down 13 cents on the day, was only 9 cents above a daily low of $17.91, which had not been seen since April 13." (Source: Unspecified sources, no date)