Petrobras hikes gasoline, diesel prices

Brazil's federal energy company Petrobras (NYSE: PBR) will raise gasoline and diesel prices at the refinery gate by 4.2% and 8% respectively as of midnight Friday, the company said in a statement. The rises are the company's third fuel price increase this year as Petrobras has tried to keep prices more or less aligned with international oil prices, which have surged in 2004. Petrobras officials have said the company's policy follows a basket of oil prices that have varied by a smaller amount than the spot price for Brent crude followed by traders. Market analysts had expected the latest fuel price increase since the last hike in October, because domestic oil prices were still lagging behind international ones. Analysts welcomed the latest increase, saying it would allow Petrobras to increase revenues, getting nearer to covering the expenses incurred by having to import a significant amount of diesel and crude. Although the company produces about 80% of the country's oil needs, it imports lighter crude since 86% of the oil produced in Brazil is heavy and Petrobras' 11 refineries can only process light crude. According to analyst Cláudio Delbrueck from local bank Unibanco, the hike is "positive" because it will reduce the difference between domestic and international oil prices to about 1% from 7% or more. "Our model points to a 200mn-real (US$72mn) positive impact in the fourth quarter results," Delbrueck said in a report.