Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) Looking For Policy Change
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) rose the most in 7 months post its announcement that that it is asking the Brazilian government to hike prices of local fuel to match global levels in an effort to stem import losses. The company’s stock rose 9.05% in Monday’s trading and has been the biggest gain since 7 March.
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) reported its quarterly earnings that missed analysts’ projections by a whopping 41%. This slump came from the record diesel demand and a drop in the local currency. In addition to this, there was also a shortfall in production at the company’s refineries. This added to the import losses in fuel.
Policy change in the offing?
In a statement on 25 October, Maria das Gracas Foster, the Chief Executive Officer said that she seeks a fuel-policy that will put the local fuel prices on par with global prices. Market watchers feel that this strategy might help in improving the future numbers for Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR).
There have been 4 price increases in local-fuel prices in Brazil. Despite this, the prices of imported diesel and gasoline top local-fuel price and the cost of imported gasoline is 20% higher, in this quarter. This was because the Brazilian government which has a majority stake in the company prohibits the sale of fuel at market prices. The objective is to control inflation rates but this has been harming the company’s bottom line.
In Monday’s trading, Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) rose by 9.05%. The opening price of the shares was $16.66, which climbed to an intraday high of $17.45 and dipped to a close of $17.35. Approximately 46.43 million shares were traded on Monday while an average volume of 14.93 million shares were traded over a 30 day period.