In this list
Agriculture | Natural Gas | Oil

Brazil faces 115 million liter ULSD deficit in October, but distributors ready: trade group

Energy | Oil | Crude Oil | Refined Products

Private producer share of Mexico’s oil output is on the rise

Energy | LNG | Natural Gas | NGL

Platts LP Gaswire

Biofuels | Renewables | LNG | Natural Gas | Oil | Petrochemicals | Marine Fuels | Tankers | Crude Oil | Refined Products | Bunker Fuel | Gasoline | Jet Fuel

APPEC 2022

Energy | Oil | Shipping | Crude Oil | Tankers

OPEC+ keeps oil quotas unchanged to await more market clarity

Energy | Energy Transition | Emissions | Carbon | Oil | Crude Oil | Refined Products | Metals | Steel

Slow economic growth pressures China to rebalance carbon reduction ambitions

For full access to real-time updates, breaking news, analysis, pricing and data visualization subscribe today.

Subscribe Now

Brazil faces 115 million liter ULSD deficit in October, but distributors ready: trade group


Stock levels adequate for shortfall

Petrobras warned of supply issues

Brazil expects surplus in Nov, Dec

  • Author
  • Jeff Fick
  • Editor
  • Derek Sands
  • Commodity
  • Agriculture Natural Gas Oil

The Brazilian Petroleum Institute expects a diesel shortage in Brazil to peak in October amid strong demand generated by the country's massive agriculture sector and low supplies of the fuel in global markets, according to the trade group's latest market bulletin.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The institute, or IBP, estimated that Latin America's biggest economy will register a ULSD deficit of 115 million liters in October, about five times more than an estimated deficit of 23 million liters in August, the trade group said Oct. 4. That included ULSD demand of 3.389 billion liters and ULSD output and imports of about 3.274 billion liters during the month.

Despite expectations for a massive jump in Brazil's domestic ULSD deficit, regulatory support from the National Petroleum Agency, or ANP, and prior planning by fuel distributors will likely make up for the shortfall, the IBP said.

"The deficit projected for October is met by distributors' stock levels," the IBP said. "In this way, sector agents will continue to offer the products necessary to supply the country despite international market volatility."

The IBP's estimate for a shortfall in domestic ULSD supplies was not a surprise, given warnings issued earlier this year by state-led oil company Petrobras about the impact of criticism of the company's import-parity pricing policy on Brazil's import markets. Petrobras needs to keep domestic diesel and gasoline prices at parity with international imports in order to keep arbitration windows open for third-party importers, which supply about 25% of the country's diesel and LPG demand and about 15% of gasoline consumption, company and industry officials say.

While Petrobras has reaffirmed its commitment to maintaining domestic fuel prices at parity with imports, the company has embarked on a price-cutting spree since new CEO Caio Paes de Andrade took over leadership of the company June 28. Since then, Petrobras has implemented multiple price cuts to refined products such as diesel, gasoline, jet fuel and asphalt, among others.

Andrade was the fourth CEO to head the company over the past year or so, with President Jair Bolsonaro carrying out a series of management shakeups amid scathing criticism of a policy that he blamed for poor ratings in domestic opinion polls.

While Petrobras had previously been careful to maintain domestic fuel prices at or above parity during the reductions, the scenario has shifted in recent days, according to the latest market analysis from the Brazilian Fuel Importers Association, or Abicom. Petrobras' current wholesale diesel price was 3.0% discount to parity, while gasoline prices were at an 8.0% discount. That means import windows were closed at current prices, Abicom said.

International refined-product markets also remained tight, the IBP said.

Diesel supplies in Europe were expected to be further squeezed in coming weeks because of unexpected maintenance shutdowns and other events, such as a strike in France, the trade group noted. The retreat in production also came amid expectations that Europe will continue to reduce its dependence on Russian barrels.

In the US Gulf of Mexico, historically a key supplier for Brazil, stocks also appear to be at historic lows, the IBP said. US supplies of distillates, including ULSD, were 20% below the average for the past five years as of last week, the IBP noted.

"The external scenario still needs to be accompanied, with attention paid to diesel liquidity in international markets for domestic supply via imports," the IBP said.

Despite the current grim outlook, the future looks brighter, according to the IBP's estimates.

Brazil is expected to run a ULSD surplus of 40 million liters in November and 62 million liters in December, the IBP said. ULSD demand should slide to 3.119 billion liters as the harvest fades in November, with output and imports estimated at 3.159 billion liters. In December, ULSD demand should further retreat to 3.048 billion liters on output and imports of 3.11 billion liters.