The slide of crude into a bear market sank Petroleo Brasileiro SA, sending the Ibovespa to the longest rout since February 2013.

The oil producer at the center of Brazil’s largest corruption scandal extended this month’s tumble to 25 percent. Brent plunged more than 20 percent from its peak, and crude dropped to a four-month low of $47.39 a barrel a barrel in New York on speculation the global supply glut will grow. Petrobras has said that its investments in offshore production are economically viable with the commodity above $45.

“The scenario for Petrobras is getting even more complicated,” Celson Placido, an economist at brokerage XP Investimentos, said by phone from Sao Paulo. “The plunge in crude implies lower profits from its investments, and may also be negative for the company’s asset negotiations.”

Chief Executive Officer Aldemir Bendine is seeking to contain damage from a decade of alleged kickbacks with plans to sell $15.1 billion in assets by the end of next year. The world’s most-indebted oil company is joining producers from Chevron Corp. to ENI SpA in trying to raise cash and cut operating costs amid a rout in oil.

The shares led losses in the Ibovespa, which fell 1 percent to 48,735.54 at the close of trading in Sao Paulo, dropping for a seventh day. It’s set for the worst monthly slide this year.

Trading Partner

Oil joined a selloff in commodities to a 13-year low after China’s stocks tumbled amid concern that a rally sparked by unprecedented government intervention was unsustainable. The Asian nation is Brazil’s largest trading partner.

In addition to the slump in crude, Petrobras also fell after public prosecutor Deltan Dallagnol said the company has lost 6 billion reais ($1.78 billion) in deals with Braskem SA. Shares of Latin America’s largest petrochemical maker extended a two-day tumble to 14 percent.

Brazilian stocks had entered a bull market in April, after rallying more than 20 percent from this year’s low, on speculation that government measures would help shore up the budget and avoid the loss of the nation’s investment-grade status. Since then, the shares have dropped 14 percent amid forecasts for the worst recession in 25 years.

The outlook for Latin America’s largest economy worsened further this week, according to the analysts surveyed by the central bank. They now forecast a contraction of 1.76 percent for this year, compared with a previous estimate for a 1.7 percent slump.

Even as the economy decelerates, policy makers have boosted the benchmark interest rate six straight times to tame above-target inflation. They will hold their next meeting on July 28-29, with economists surveyed by Bloomberg divided on whether the monetary authority will maintain or halve the current half-point pace of rate increases.

All 10 groups in the MSCI Brazil index retreated, led by energy companies. Petrobras sank 5.3 percent.

Trading volume of equities in Sao Paulo was 6.16 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 6.72 billion reais this year, exchange data show.

Source: www.bloomberg.com

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