Petroleo Brasileiro (NYSE: PBR), or Petrobras, is down an astonishing 13% to $37.77 today in mid-day trading. It has also almost traded an entire day’s volume. Falling oil prices, economic softness, the migration away from emerging markets and are all acting against it. But a key downgrade from Citigroup is adding fuel to the fire. In this case, it added fire to the fuel.
Citi has made changes to its model portfolio for investors wanting toinvest in Latin America. It took Brazil’s oil behemoth off of itsLatin American Focus List. Citi’s new rating on the Brazil energysector is"underweight." Credit dryingup for Brazil is one of the reasons cited for the downgrade whichincluded Brazil’s consumer discretionary sector.
If Petrobras has another rough day, it will be close to challenging its52-week lows. Its 52-week trading is $36.36 to $77.61. Ken Heebner isprobably glad he lightened up when he did.
Jon C. Ogg
October 2, 2008
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