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Mexican total liquids production fell by 0.1 mb/d y/y to 1.97 mb/d in September. Combined crude and condensate output dropped by 86 thousand b/d y/y, driven by super-light crude, but it rose m/m by 23 thousand b/d to 1.74 mb/d. Heavy crude production, excluding extra-heavy output (API<10), dropped in September by 16 thousand b/d y/y, with combined output from the Ku, Maloob and Zaap (KMZ) fields down by 66 thousand b/d. This is consistent with our earlier analysis, which estimated a 0.1 mb/d loss of heavy crude from the KMZ fields this year (see E-mail alert: Mexican heavy crude declines stepping up, 15 April 2019). Meanwhile, the light Xanab field, which declined by 72% (92 thousand b/d) in the year to September, rose m/m by 15 thousand b/d to 58 thousand b/d, its highest level since October 2018. This October, we expect supply to be lower m/m owing to planned maintenance at an FPSO in the KMZ and at the C7 and C8 Akal platforms.
Crude exports in September fell by 0.2 mb/d to 0.99 mb/d, led by declining exports to the Americas (-0.21 mb/d y/y). However, exports to USGC should steady in the coming months due to a lower K-factor for Maya in November (+1.50 premium) as well as a changed pricing formula that now includes WTI-Houston instead of LLS alongside Brent and the K-factor with a new formula (effective from December). We estimate that oil demand fell by 30 thousand b/d y/y to 1.69 mb/d in September, driven by fuel oil, which fell by 53 thousand b/d y/y. Gasoline and diesel imports were lower y/y by 31 thousand b/d and 56 thousand b/d respectively. However, shipments of refined products from the US are expected to hold steady for the foreseeable future as strong cross-border traffic has supported a 13% increase in the year to September in the volume of shipments by rail from the USGC to Mexico.