Petrobras raises gasoline and diesel prices, but markets say it’s insufficient
Brazil's state-run oil company Petrobras said in a market filing that it would increase refinery prices for gasoline and diesel by 6.6% and 5.4%, respectively, starting on January 31. However the market’s reaction was negative with the Bovespa stock exchange falling to a seven-week low.
Bovespa fell 1.8% to 59,336.70 at the close of trading in Sao Paulo, the lowest since Dec. 13. Forty-six stocks sank on the measure while 22 advanced. The Real weakened 0.1% to 1.9887 per U.S. dollar. Petrobras said in a regulatory filing that it was seeking to eliminate the discount between domestic and international prices eventually.
“The increase isn’t enough to eliminate the gap with international prices,” Gustavo Mendonca, an economist at Oren Investimentos, said from Rio de Janeiro. “And it’s unlikely that the government will allow it to raise domestic prices again anytime soon.”
The higher fuel prices put “additional pressure on inflation, which is already running at a fast pace,” Mendonca said.
Petrobras fell 4.8% to 18.20 Reais, the biggest drop since June 25. The fuel price adjustment announced will reduce the price gap for gasoline to 11.8% and diesel to 12.2%, Banco Bradesco SA analysts wrote in a note distributed to clients.