Brazil crude exports, China shipments, fall in June

Brazil exported around 5.59mn t (1.37mn b/d) of oil in June, following a May surge that saw the dispatch of some 1.91mn b/d, according to trade ministry data.

China saw its share of receipts increase to around 88pc in June from 67pc in May, but its corresponding volume slipped to around 1.20mn b/d from 1.32mn b/d in May.

Because so much Brazilian crude flows to Chinese refiners, a recovery in China's oil demand reverberates in Brazil.

China's appetite for light sweet pre-salt crude grades such as Lula has allowed Brazil's state-controlled Petrobras and other producers of deepwater deposits sidestep the worst of the market fallout in recent months. But congestion at Chinese ports and domestic logistical constraints in early July point to more limited flow so far this month.

Producers in Brazil dispatched more crude to countries such as Malaysia, the Netherlands, Spain, India and Portugal in the first half of the year after the pandemic initially sapped Chinese demand that has buoyed pre-salt output for years. China's share of export receipts in the first half of 2020 averaged around 58pc, a 22pc drop compared with the same period of 2019, according to the trade ministry data.

Brazil's hydrocarbons regulator (ANP) will publish oil production data for June later this month, but a dip in output in May could be the start of a downward trend in the second half of the year—partially the result of Petrobras' planned maintenance at offshore platforms.

Brazilian crude production averaged around 2.755mn b/d in May, down by 6.5pc from April and up a slight 1.36pc on the year, ANP data indicates.

Petrobras has suggested that its own crude exports could drop from a 1mn b/d record in April as it turns its focus to the export of higher margin refined products, namely low-sulfur marine fuel. The company is also increasing the production of motor fuels for the domestic market as demand rebounds on the recent easing of lockdown measures designed to curb the spread of Covid-19.

"Fuel demand in Brazil in May was better than April, June better than May, and now we are seeing July demand better than June, a signal that Brazil's economy is recovering, albeit slowly," Petrobras chief executive Roberto Castello Branco said in a recent webinar.

By Nathan Walters