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Brazilian total liquids output fell by 14 thousand b/d y/y to 2.70 mb/d in April, led by lower NGLs production (-21 thousand b/d). Crude output rose m/m by 44 thousand b/d (+7 thousand b/d y/y), driven by pre-salt output, which hit a record high at 1.57 mb/d (+0.15 mb/d y/y). Notable pre-salt production in the Santos basin came from the Buzios field, up by 47% m/m at 0.17 mb/d, supported by the ramp-up of new systems, some of which will hit capacity at year-end. However, the Campos basin continued to underperform, with year-to-date declines averaging 12%. There is further downside risk to our 2019 Brazilian growth estimates. Crude exports rose y/y by 0.57 mb/d to 1.64 mb/d in April, led by China, with Petrobras even leasing storage in China to serve teapots. Exports to the USGC could pick up from June amidst tariffs imposed by the US on imports from Mexico starting on 10 June.
Brazilian oil demand rose by 77 thousand b/d y/y to 2.41 mb/d in April. Distillate demand increased by 7 thousand b/d y/y to 0.98 mb/d, in line with the five-year average of 0.97 mb/d. Rising diesel prices remain a concern, although independent trucker strikes have not reached the levels seen last year. Gasoline demand remains weak, falling by 37 thousand b/d y/y—the 20th straight decline. Ethanol demand increased by 0.11 mb/d y/y to 0.38 mb/d, some 0.13 mb/d above the five-year average, and refinery runs fell by 24 thousand b/d y/y to 1.79 mb/d. Weak gasoline demand has pushed refiners to max distillate mode as gasoline yields have fallen by 4.2 ppts since peaking at 26.7% in January 2018. In comparison, distillate yields have risen by 3.9 ppts. Distillate imports fell y/y by 27 thousand b/d to 0.22 mb/d as domestic production increased by 28 thousand b/d y/y to 0.73 mb/d.