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Brazilian February liquids output fell by 0.15 mb/d y/y to 2.58 mb/d, the largest yearly drop since September 2018, led by a 17% y/y drop in the Campos. Output also fell m/m, with the closure of unit P-43 in the Barracuda field reducing output by 33 thousand b/d m/m and maintenance in the Jubarte field cutting out 29 thousand b/d. March should have seen something of a recovery thanks to the start of production at Lula North (P-67) and Buzios-3 (P-76), which should, barring unplanned works, help Lula output pass 1 mb/d in the coming months. Despite this, however, the lower-than-expected output seen in January and February has led us to reduce our 2019 y/y liquids growth forecast by 0.1 mb/d to 0.22 mb/d. Meanwhile, February crude exports rose y/y by 0.40 mb/d to 1.31 mb/d, boosted by strong Chinese demand (+11% y/y), assisting a 0.42 mb/d (11.8 mb) stockdraw—the biggest draw since July 2018 when crude exports hit a record high.
Brazil oil demand increased by 0.13 mb/d y/y to 2.43 mb/d in February, as distillate demand rose by 58 thousand b/d y/y to 0.98 mb/d. Gasoline demand fell by 39 thousand b/d y/y to 0.66 mb/d (the slowest decline since October 2017), while ethanol demand rose by 0.11 mb/d to 0.39 mb/d due to competitive ethanol prices. Refinery runs grew by 0.13 mb/d y/y to 1.74 mb/d. The uptick in Brazilian crude runs can be attributed to the return of the Replan refinery to normal operations after a fire damaged the CDU in August 2018. The Replan refinery boosted crude throughput by 90 thousand b/d m/m to 0.32 mb/d, lifting utilisation rates by 21.5 ppts m/m to 77%. Refiners remain in max distillate mode, as distillate yields increased by 1.1 ppts y/y to 39.8%, while gasoline and jet yields fell by 1.8 ppts y/y and 0.7 ppts y/y respectively. Due to higher domestic production, distillate imports fell y/y by 72 thousand b/d to 0.15 mb/d.