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Mexican total liquids production fell by 0.18 mb/d y/y to 1.91 mb/d in June, led by crude (-0.16 mb/d). However, crude output stabilised m/m (+8 thousand b/d) following ‘technical failures’ which weighed on May’s output. The market continues to highlight the importance of private investment in reversing Mexico’s production declines, but at 32 thousand b/d in June, it remains a fraction (2%) of total Mexican crude output. The start-up of Eni’s 15 thousand b/d Mitzón 2 field will offer further support in July, but even after accounting for projects in the contracting phase, these ramp-ups will fail to move the needle this year. For 2020, we have revised Mexico’s supply higher by 70 thousand b/d to 1.65 mb/d, reflecting an up-tick in activity at a number of fields (see E-mail alert: Global light-heavy imbalance set to intensify as Mexico develops lighter fields, 5 July 2019). Full-year 2020 output should still be lower y/y by 31 thousand b/d. We see declines in total crude supply persisting until Q4 20, when we expect Mexican output to rise y/y.
Crude exports in June fell by 17 thousand b/d y/y to 0.99 mb/d, driven by a decrease in exports to the US by 13 mb/d y/y and 91 mb/d m/m. A lower August formula for Maya’s K factor should help boost exports next month, especially as Latin American sour prices have started to recover in line with global sour crudes. Refinery runs remained relatively flat y/y but increased by 66 thousand b/d m/m, reaching 0.64 mb/d amid fewer unplanned outages. Oil demand in June was up by 29 thousand b/d y/y at 1.8 mb/d, mostly driven by a 19 thousand b/d y/y increase in fuel oil, which also contributed to a 0.14 mb/d y/y decrease in fuel oil exports. Total product imports increased by 58 thousand b/d y/y, reaching 1.2 mb/d, as Mexico’s gasoline stocks grew by 142% y/y and 10% m/m to 7.5 mb in the week ending 5 July, amid less fuel theft.