(Reuters) Brazilian state-run oil firm Petrobras has reversed most of its previously announced production cuts due to higher-than-expected demand for some fuels, it said on Monday, a surprising turnaround that may be tied to an aggressive bet on bunker fuel.
In a Monday securities filing with first-quarter production figures, Petroleo Brasileiro SA PETR4.SA, as the firm is formally known, noted that it initially decided to cut April oil production to 2.07 million barrels per day (bpd), but later in the month decided to increase production to 2.26 million bpd.
The reversal suggests Petrobras is confident in demand for its production mix even as rival oil majors scale back and the Organization of the Petroleum Exporting Countries orchestrates deep cuts in the face of rock-bottom oil prices.
“With demand for our products proving better than expected, we opted to gradually return average production to around 2.26 million bpd in April, while also increasing utilization rates at refineries,” the company said.
In late March and early April, the firm had announced total cuts of 200,000 bpd. Oil production averaged 2.32 million bpd of oil in the first three months of the year.
While Petrobras did not say which fuels were most in demand in April, company executives have made a priority of producing bunker fuel, which is used by ships. First-quarter production of bunker and other fuel oils by Petrobras rose 18.5% from the previous quarter and almost 50% from the same period a year before.
Executives have repeatedly said demand for bunker fuel appears more resilient during the novel coronavirus pandemic than demand for other products, such as gasoline and jet fuel.
Including natural gas and other petroleum products, Petrobras produced 2.909 million barrels of oil equivalent per day (boepd) in the first quarter, down 3.8% from the previous quarter and up 14.6% from the same period a year before.
The firm said its results were helped by various platforms coming online and negatively impacted by a number of scheduled stoppages.
(Reporting by Gram Slattery and Roberto Samora; Editing by Sandra Maler and Lisa Shumaker)