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Brazilian January liquids output rose by just 7 thousand b/d y/y to 2.73 mb/d, with maintenance again eroding growth from new project ramps-up. In January, three pre-salt and two post-salt units were offline for maintenance, offsetting ramp-ups at P-69 and P-75, (first oil in Q4 18). We expect February output to have been boosted by production starting at Lula North (P-67) and Buzios-3 (P-76), which should help Lula output pass 1 mb/d in the coming months. There should be no impact from an oil spill at the Parque das Baleias (P-58) platform (December output 5 thousand b/d), as Petrobras said output was unaffected. We forecast Brazil’s 2019 liquids output growth at 0.31 mb/d, although supply may again come in below our expectations and those of the consensus given there are still another few months of heavy maintenance to come.
Brazil oil demand increased by 84 thousand b/d y/y to 2.3 mb/d in January, as distillate demand rose by 51 thousand b/d y/y to 0.89 mb/d. Gasoline demand fell by 54 thousand b/d y/y to 0.63 mb/d, while ethanol demand rose by 96 thousand b/d to 0.38 mb/d, as hydrous ethanol prices have kept ethanol competitive with gasoline throughout most of Brazil. Refinery runs increased by 48 thousand b/d y/y to 1.66 mb/d but were down by 18 thousand b/d m/m, reflecting a third straight month of m/m declines. Refinery runs are expected to have increased in February, as the Replan refinery restarted the 0.42 mb/d CDU that was damaged by a fire in August 2018. The refinery, Brazil’s largest, has been utilising about 50% of its capacity since December. Healthy distillate and weak gasoline demand have kept refiners in max distillate mode—distillate yields rose by 2% y/y, while gasoline yields fell by 3% y/y. As a result, diesel imports fell sharply y/y by 0.16 mb/d to 0.18 mb/d, while gasoline imports were flat y/y.