Petrobras may raise gasoline price further: report

Sat Jul 14, 2012 3:03pm EDT
 
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SAO PAULO (Reuters) - Brazil's state-led oil company Petrobras (PETR4.SA: Quote) may raise gasoline prices again this year, a move that would improve the image of the company's new chief executive in the eyes of the market, a local paper said on Saturday.

Petrobras shares rose 5 percent on Friday after the company said the night before it would raise wholesale diesel prices by 6 percent, the second price increase in less than a month. Domestic fuel sales make up a large share of the company's revenues.

In late June, the market pummeled company shares after Petrobras management announced its first price increases in diesel and gasoline in roughly eight years, moves the market considered too modest to staunch heavy losses in its fuel-distribution business.

On Saturday, O Estado de S. Paulo newspaper cited Energy Minister Edison Lobao saying about gasoline, "We can imagine that there could be a change in prices at the pump still this year."

The company has been registering losses from its distribution arm due to government policy to freeze fuel prices that has forced the company to import gasoline and diesel at market prices and sell at below-market rates.

Although the June wholesale price increases of 7.8 percent in gasoline and 3.9 percent in diesel were not felt at the pump, Lobao said the next price increase in gasoline would be passed to the consumer.

The government has been concerned higher fuel prices may raise inflation, but these fears appear to have abated as the local economy slows and Petrobras has reported increasingly disappointing earnings.

Credit Suisse analysts Emerson Leite and Andre Sobreira said about the company's increase in diesel prices last week that it "reinforces the credibility of (Petrobras CEO Maria das) Gracas Foster who, after suffering market pressure, managed to secure the price increase."

(Reporting by Reese Ewing; Editing by Philip Barbara)