Petrobras Cuts Brazil Gasoline Prices by Near 10%; Sugar Prices Tumble

by Marta Nogueira, Marcelo Teixeira (Reuters) Brazil’s state-controlled oil company Petrobras cut gasoline prices at refineries in the country by almost 10% on Thursday, the first cut since this week’s oil price collapse, a move that could boost sugar production and reduce ethanol output.

This move makes retail gasoline more competitive against ethanol, possibly cutting the biofuel’s demand and prompting mills to switch production to sugar instead, said Claudiu Covrig, a sugar analyst at S&P Global Platts.

Gasoline and ethanol compete for driver preference at pumps, since most cars in Brazil can run on both fuels.

Ethanol demand grew strongly in the last two years due to its price advantage over gasoline. That led local mills to produce more of the biofuel and less sugar, a trend that could change now.