Mexican liquids production fell m/m by 69 thousand b/d to 1.86 mb/d in January, lower y/y by a massive 0.33 mb/d and a record low. Crude output fell by 0.29 mb/d y/y to 1.62 mb/d, led by super light and light crude, which dropped by 97 thousand b/d and 0.12 mb/d y/y respectively. Meanwhile, heavy crude production fell below 1 mb/d, at a time when Venezuelan production losses are mounting. Crude production underperformed our already bleak expectations by 0.15 mb/d and with Mexican President Obrador halting future joint ventures with Pemex, the much-needed capital to revive existing assets may not be as forthcoming as many had expected.
Crude exports fell y/y in January, but only by 36 thousand b/d, reaching 1.1 mb/d. Shipments to Europe rose m/m and y/y by 0.13 mb/d and 66 thousand b/d respectively; exports to the Americas also rose m/m, by 70 thousand b/d. Pemex has held its K factor for Maya flat in March, albeit much lower than the January figure of $1.55, with both February and March trading at a discount of $0.35. With the loss of Venezuelan crude, we see USGC refiners turning to Mexico. Refinery runs remain around December 2018’s throughput of 0.49 mb/d, according to SENER’s government database. Oil demand in January fell by 8 thousand b/d y/y to 1.61 mb/d, led by fuel oil and gasoline demand, which dropped by 25 thousand b/d and 58 thousand b/d y/y respectively. The fuel crisis worsened in the first few weeks of January, as the government shut key pipelines that are known to be illegally tapped, in an effort to combat fuel theft. This led to widespread fuel shortages from late December 2018 to early January as crude and refined products were trucked around the country, leading to a significant y/y rise in diesel demand of 0.11 mb/d to 0.47 mb/d, adjusted for third-party sales based on preliminary figures.