As Mexico is slashing oil exports, U.S. imports of Mexican crude slumped last week to the lowest level on record, data from the Energy Information Administration (EIA) showed this week.
Weekly U.S. crude oil imports from Mexico fell to 209,000 barrels per day (bpd) in the week to April 5, the data from the EIA showed, as Mexican state oil firm Pemex is cutting exports to divert more crude to domestic refineries.
To compare, U.S. imports of Mexican crude averaged more than 730,000 bpd last year.
Mexico has started to cut the amount of crude oil it exports by 330,000 bpd as it redirects supply to local refineries, with the volume to be cut accounting for around a third of the total crude that Mexico sells abroad.
This month, Pemex has slashed oil exports by 436,000 bpd as Mexican refineries ramp up, including the new Dos Bocas facility, which will take in some 179,000 bpd this year. The refinery’s nameplate capacity is 340,000 bpd.
The reduction in exports was necessary because Pemex’s output has been on a steady decline due to natural depletion and not enough new discoveries. In February, the daily average production fell to the lowest in 45 years.
Currently, Pemex processes half of its daily crude oil output, which stands at an average of 1.8 million bpd, according to a recent update by Mexico’s President, Andres Manuel Lopez Obrador.
The cut in exports is partly due to efforts in Mexico to boost domestic gasoline and diesel output ahead of the presidential election on June 2, unnamed sources familiar with the plans told Bloomberg earlier this month.
Mexico’s export cut took the market by surprise and added to the tightness in supply, especially of heavier sour grades.
The lower Mexican supply has boosted the price of the medium sour U.S. Mars crude, which is being produced in the Gulf of Mexico.
By Tsvetana Paraskova for Oilprice.com
