Petroecuador unveiled bids April 14 for a six-cargo 80 RON tender discounted to its gasoline formula in contrast to the diesel market where recent Latin American tenders have seen much higher premiums than the past.

Ecuador's state-owned oil company received three offers for the 1.77 million barrels tender, with Trafigura offering to sell at a $1.51/b discount to the Platts US Gulf Coast unleaded 87 pipeline assessment from S&P Global Commodity Insights, while Novum had a $0.58/b discount and Glencore a $0.11/b premium, sources said. No official award was immediately announced, although sources said it would likely be awarded to Trafigura. Petroecuador's previous RON 80 tender for 590,000 barrels in October was awarded at a $0.66/b premium, also to Trafigura.

The gasoline tender came after Petroperú and Petroecuador, starting late March, broke a month-long lull in large Latin American tenders, although the companies paid up to do so. Petroecuador paid a $7.45/b premium to the Platts benchmark USGC ULSD pipeline for seven cargoes of 50 ppm premium diesel, compared with slight discounts for previous tenders this year, sources said, while Petroperú paid a premium of $8.80/b, nearly double the premiums paid for January and February tenders for four ultra low sulfur diesel cargoes.

Latin America is a flat price buyer and outright prices remain well above historical norms and have reached record levels for diesel. But outright prices and differentials for gasoline are relatively much lower than tenders for ULSD in the region.

"Diesel is very short in Latin America at the moment," said Felipe Perez, Latin America downstream strategist for S&P Global. "Days of supply are quite low in almost all the major markets. Gasoline in Latin America will enter a lower demand seasonality, although demand has been quite robust."

Winter slows driving demand for gasoline but creates more distillate demand for heating and power generation. The loss of Russian diesel supply into the global market that already experienced low inventories has already caused record global ULSD prices. Perez said that Petroperú is restarting its 95,000 b/d Talara oil refinery after a lengthy renovation that could reduce the need to import large volumes of refined products. The refinery began trial runs April 12 and expects to be operating fully in six months.

But diesel demand was also strong because of spring harvest, especially in Argentina, where an industry group said diesel rationing has begun at service stations because price controls keep local prices 30% less than import prices, discouraging imports.

The Platts assessments for gasoline and ULSD in Latin America have mirrored movements in the benchmark USGC markets, where finished gasoline settled at $3.3064/gal April 14, well below ULSD pipeline at $3.8948/gal. Comparatively, year-ago prices recorded USGC finished gasoline at $1.9880/gal, while ULSD trailed at $1.8425/gal.

In Eastern Mexico, Platts assessed delivered CIF cargoes for ULSD up $4.73 at $162.84/b and for gasoline up $3.39 at $134.92/b April 14. Ecuador RON 93 CIF jumped $2.57 to $141.79/b and ULSD CIF rose $4.24 to $168.17/b.

For import parity prices, ULSD prices in Peru rose $7.69 to $170.3/b and gasoline rose $4.94 to $1.4034/b. IPP prices for Santos, Brazil, rose $7.15 to $174.59/b for ULSD and $5.12 to $129.88/b for gasoline.

"If prices stay as high as they are now, we might see a slightly demand destruction, but most of the governments in the region are doing some tax break or subsidy to alleviate the pain at the pump for consumers," Perez said.