Petrobras Jumps on Carioca Rumors

Petroleo Brasileiro SA (PBR) shares moved higher Tuesday after traders speculated that the firm may be close to a major announcement. The rumors stemmed from unusually high call option volume, which hit 100,214 contracts before the day ended. The majority of the options trading took place at the September $55 calls, which suggests that traders believe shares will appreciate 12.7% over the next 30 days. The bullish move is especially surprising given the downward movement of crude oil.

Many investors believe that Petrobras is close to announcing more definitive findings on its Carioca field on Block BM-S-9 in the Santos Basin off the coast of Rio de Janeiro. The discovery is close to the company’s huge Tupi discovery on Block BM-S-11, which was announced in October of 2007. Given the huge findings in Tupi, many investors are bullish about the prospects of the Carioca field and any announcement could send shares dramatically higher.

Oil prices themselves have declined over the past couple of months, but prices still remain substantially higher on the year. Currently, oil futures have traded with strong support on the $112 per barrel mark. Many experts believe that any substantial dip below that point will require a new injection of bearish economic data into the marketplace. Oil prices are also expected to receive a boost on Wednesday when the Energy Information Administration is expected to report a decline in petroleum stocks.

Petroleo Brasileiro SA - Petrobras (Petrobras) is a Brazil-based holding company is engaged in the exploration, exploitation and production of oil from reservoir wells, shale and other rocks, and in the refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy related activities. Petrobras has 109 production platforms and 15 refineries. It operates 31,089 kilometers of pipelines.

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