Petroleo Brasileiro SA (PETR4), the state- controlled company that is required to supply Brazil’s fuel needs, soared the most in more than four years after the government unexpectedly approved a 5 percent increase in diesel prices.
The producer based in Rio de Janeiro rose 9 percent to 18.05 reais at the close in Sao Paulo, the biggest increase since Dec. 10, 2008. It posted the biggest gain of the 10 oil companies with more than $100 billion in market value.
“No one was expecting another price increase this year given comments made by Brazilian authorities concerned with inflation,” Marcus Sequeira, an analyst at Deutsche Bank AG, said in a note to clients. “The announcement brings hope that other increases could be granted throughout the year.”
The price increase will help reduce losses from selling imported diesel at a discount as part of a government policy to curb inflation. Fuel imports reduced Petrobras’s 2012 profit to the lowest since 2004. Diesel consumption grew 7 percent last year and exceeded Petrobras’s capacity to refine the fuel. Consumption will grow at a similar pace in 2013, Florival Carvalho, a director at Brazil’s oil regulator, said yesterday.
The increase, the second in five weeks and effective immediately, reduced the discount to international prices to the lowest in a year at 6 percent, Bank of America analyst Frank McGann said in a note to clients. The adjustment will potentially add $2 billion in revenue this year, he said.
Petrobras’s voting shares rose 15 percent, the most in almost 14 years, since March 10, 1999. Voting shares are down 16 percent this year after the company cut voting stock dividends, compared with a 7.5 percent decline in non-voting shares.
“We see this increase as a victory for Petrobras management, which continues to fight for a more rational approach to diesel and gasoline pricing in the country,” Itau Unibanco Holding SA (ITUB4) analysts Paula Kovarsky and Diego Mendes said in a research report yesterday after the change was announced.
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