RIO DE JANEIRO, Oct 14 (Reuters) - The price of gasoline on the international market has slipped below the domestic price of the fuel in Brazil for the first time in nearly four years, a situation that should ease losses on imports at the refining division of state-run oil company Petrobras, Credit Suisse said in a report.
The international price of gasoline was 1 percent below the Brazilian domestic price on Oct. 13, the Swiss investment bank’s Sao Paulo-based Brazil Economics Team said in a note to investors on Tuesday.
Futures prices suggest the discount on imports will increase to about 4 percent in December if the U.S. dollar-Brazilian real exchange rate remains constant, the report said.
That outlook could reverse, making imported gasoline 4 percent costlier than domestic gasoline if Brazil’s real weakens as far as 2.60 to the dollar from 2.39 reais today.
From January to September international gasoline cost on average 17.3 percent more than Brazilian fuel. The last time international fuel prices were below domestic fuel prices was in late 2010, according to a previous Petrobras presentation.
That gap between Brazilian and international fuel prices contributed to Petroleo Brasileiro SA, as Petrobras is formally known, racking up 8.69 billion reais ($3.64 billion) reais of losses in the first half of 2014.
Unable to meet all domestic fuel needs from a dozen local refineries, Petrobras has had to make up the rest with imports. The government though has not allowed Petrobras to raise domestic fuel prices in line with international prices, forcing the company to sell the imports at home at a loss.
The government has held Brazilian wholesale fuel prices steady in an effort to control inflation which in September jumped to 6.75 percent, a level above the 6.5 percent limit of the central bank’s target range.
Diesel, Brazil’s most important vehicle fuel, remained 5 percent more expensive outside of Brazil than in the country, the Credit Suisse note said. (Reporting by Jeb Blount; Editing by Lisa Shumaker)