Brazilian total liquids output rose y/y by 0.19 mb/d to 2.88 mb/d in July. Crude output hit a record high in July, rising by 0.22 mb/d m/m to 2.78 mb/d as Buzios output ripped higher. The pre-salt led the crude growth, rising to a record high of 1.73 mb/d (+0.28 mb/d y/y), driven by the Buzios field (+0.26 mb/d y/y). Production at the Buzios system’s P-74 and P-75 ramped up in July by 63 thousand b/d m/m and 32 thousand b/d m/m respectively, following the resolution of delays to commissioning gas plants in June. P-74 hit its plateau rate of 0.15 mb/d in July, implying limited future growth. We forecast crude output in Q3 19 to be higher y/y by 0.26 mb/d on the ramp-up of the Buzios and Lula FPSOs, which came online over 2018 and 2019. The one remaining unit to come online this year is the 0.15 mb/d P-68. Brazil’s crude exports fell y/y by 0.96 mb/d to 0.87 mb/d in July on a high base (-5 thousand b/d m/m). Exports to China fell by 90 thousand b/d m/m, while flows to the US rose (+0.11 mb/d m/m), partially substituting Venezuelan barrels.
Brazilian oil demand rose by 0.16 mb/d y/y to 2.50 mb/d in July, led by ethanol (+52 thousand b/d). Combined Brazilian ethanol and gasoline demand rose by 0.1 mb/d, likely buoyed by an 11% y/y jump in passenger cars registered in both June and July. Diesel demand rose y/y by 42 thousand b/d, supported by a slight recovery in industrial activity and a surge in heavy vehicle traffic on toll roads (+8% y/y). Refinery runs dropped y/y by 84 thousand b/d to 1.77 mb/d amid planned works at the RLAM refinery. Total products imports rose by 0.21 mb/d, led by naphtha (+83 thousand b/d). We expect refinery runs to have fallen in August and to fall further in September on higher offline CDU capacity (+28 thousand b/d y/y and +0.17 mb/d, respectively), boosting crude exports. We expect total products imports to rise over the rest of Q3 19.