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Petrobras (PBR) to Cut Diesel Prices by 9% Under New CEO
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Petroleo Brasileiro SA, also known as Petrobras (PBR - Free Report) , the state-run Brazilian oil company, recently announced a reduction in average refinery gate diesel prices by nearly 9%, with effect from Wednesday. This marks the first price cut under the leadership of the new CEO, Jean-Paul Prates. The diesel prices would be lowered to 4.10 reais (79 cents) per litre from 4.50 reais, in accordance with market expectations.
In recent years, Petrobras has followed global oil market trends in determining its domestic prices. However, some investors are concerned that the new CEO, Jean Paul Prates, may change Petrobras' fuel pricing policy. This is because President Luiz Inacio Lula da Silva has repeatedly criticized it in the past. The company explained that the price cut is aimed at "balancing" local and international markets, as gasoline prices remain unchanged.
The company’s move to lower diesel prices was expected due to the recent decline in global prices. An analyst, Pedro Shinzato, believes that international diesel prices have faced intense volatility since early 2022, and Petrobras is aligning with the downward trend in import parity due to lower international crack spreads.
According to Credit Suisse analyst Regis Cardoso, local diesel prices are now at a 6% premium over import parity prices, while gasoline prices trade at a 5% premium. However, ABICOM, the fuel importers’ association noted that the cut could have been smaller as global prices are now on the rise again, driven by optimistic expectations for rising demand in China.
Zacks Rank and Key Picks
Petrobras S.A., headquartered in Rio de Janeiro, is the largest integrated energy company in Brazil and one of the largest in Latin America, engaging in activities such as oil exploration, exploitation, refining, processing, trading and transportation, natural gas and other fluid hydrocarbons, and other energy-related activities.
Currently, Petrobras carries a Zacks Rank #3 (Hold). Meanwhile, investors interested in the energy sector might look at stocks like ProPetro Holding (PUMP - Free Report) and Energy Transfer (ET - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and NGL Energy Partners (NGL - Free Report) holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ProPetro Holding: PUMP currently has a Forward P/E ratio of 4.47. For comparison, its industry has an average Forward P/E of 36.20, which means PUMP is trading at a discount to the group.
ProPetro Holding is worth approximately $1.14 billion. Its shares have decreased by 8.8% in the past year.
Energy Transfer LP: Energy Transfer LP is valued at around $39.69 billion. ET delivered an average earnings surprise of 28.9% for the last four quarters, and its current dividend yield is 7.93%.
For the last-reported quarter, Energy Transfer reported earnings of 30 cents per share, which were in line with the Zacks Consensus Estimate.
NGL Energy Partners: NGL Energy Partnersis worth approximately $219.57 billion. Its shares have decreased by 30.2% in the past year.
NGL Energy Partners LP is a limited partnership company that operates a vertically-integrated propane business with three segments: retail propane, wholesale supply and marketing, and midstream.
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Petrobras (PBR) to Cut Diesel Prices by 9% Under New CEO
Petroleo Brasileiro SA, also known as Petrobras (PBR - Free Report) , the state-run Brazilian oil company, recently announced a reduction in average refinery gate diesel prices by nearly 9%, with effect from Wednesday. This marks the first price cut under the leadership of the new CEO, Jean-Paul Prates. The diesel prices would be lowered to 4.10 reais (79 cents) per litre from 4.50 reais, in accordance with market expectations.
In recent years, Petrobras has followed global oil market trends in determining its domestic prices. However, some investors are concerned that the new CEO, Jean Paul Prates, may change Petrobras' fuel pricing policy. This is because President Luiz Inacio Lula da Silva has repeatedly criticized it in the past. The company explained that the price cut is aimed at "balancing" local and international markets, as gasoline prices remain unchanged.
The company’s move to lower diesel prices was expected due to the recent decline in global prices. An analyst, Pedro Shinzato, believes that international diesel prices have faced intense volatility since early 2022, and Petrobras is aligning with the downward trend in import parity due to lower international crack spreads.
According to Credit Suisse analyst Regis Cardoso, local diesel prices are now at a 6% premium over import parity prices, while gasoline prices trade at a 5% premium. However, ABICOM, the fuel importers’ association noted that the cut could have been smaller as global prices are now on the rise again, driven by optimistic expectations for rising demand in China.
Zacks Rank and Key Picks
Petrobras S.A., headquartered in Rio de Janeiro, is the largest integrated energy company in Brazil and one of the largest in Latin America, engaging in activities such as oil exploration, exploitation, refining, processing, trading and transportation, natural gas and other fluid hydrocarbons, and other energy-related activities.
Currently, Petrobras carries a Zacks Rank #3 (Hold). Meanwhile, investors interested in the energy sector might look at stocks like ProPetro Holding (PUMP - Free Report) and Energy Transfer (ET - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and NGL Energy Partners (NGL - Free Report) holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ProPetro Holding: PUMP currently has a Forward P/E ratio of 4.47. For comparison, its industry has an average Forward P/E of 36.20, which means PUMP is trading at a discount to the group.
ProPetro Holding is worth approximately $1.14 billion. Its shares have decreased by 8.8% in the past year.
Energy Transfer LP: Energy Transfer LP is valued at around $39.69 billion. ET delivered an average earnings surprise of 28.9% for the last four quarters, and its current dividend yield is 7.93%.
For the last-reported quarter, Energy Transfer reported earnings of 30 cents per share, which were in line with the Zacks Consensus Estimate.
NGL Energy Partners: NGL Energy Partnersis worth approximately $219.57 billion. Its shares have decreased by 30.2% in the past year.
NGL Energy Partners LP is a limited partnership company that operates a vertically-integrated propane business with three segments: retail propane, wholesale supply and marketing, and midstream.