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Weekly Roundups

COVID-19 Disturbs Prices in Mexico

Fri, 02/28/2020 - 14:36

COVID-19 Concerns Impact Oil

The growing threat of COVID-19, which saw the first case confirmed in Mexico on Friday, continues to impact oil prices worldwide. The Mexican crude mix has not been spared as US$1.41 was wiped off its price per barrel on Thursday. At the day’s closing, the Mexican crude mix was valued at US$42.05 per barrel. This price drop follows the pattern of other major oil mixes, with the WTI mix losing US$1.25 (or 2.34 percent of its total value).

As the contagion expands around the globe, oil prices have fallen. According to Oilprice.com, the price per barrel of the Mexican Crude mix has fallen from US$49.50 to US$42.05 between January 20 and February 27, while the WTI crude price decreased from US$53.88 to US$44.24 in the same period.

Wood Mackenzie has outlined its concerns on global oil prices, saying that while manufacturing shutdowns can impact a company’s balance sheet, delays in projects make little difference to a global portfolio in comparison to the drop in the price of a barrel.

 

PEMEX Losses Nearly Double

PEMEX suffered further financial trouble in 2019, as the company’s losses grew by 92 percent on 2018 to a total of MX$346.1 billion. This is the company’s worst financial result since 2015.

The main reason offered for the loss was the 16.5 percent drop in fuel sales caused by the fall in the price of first-hand gasoline, the growth and expansion of retail competitors in the market and the lower export price and volume of crude oil.

The results come despite the intensive efforts of the López Obrador administration to slowing the NOC’s mounting debt, including the refinancing of US$36 billion of its overall debt, which rose to US$105.2 billion.

 

Mexican Production Reaches Milestone

CNH statistics show that the national oil production in Mexico hit a 15-month high in January as 1.724MMb/d were produced, a slight increase from October 2018 when rates sat at 1.744MMb/d.

This stabilization of production is a positive signal for the aims of PEMEX and the national government that have set a goal to slow the production drop and to push rates up to 2.6MMb/d by 2024.

 

Natural Gas Production Grows

The production of natural gas in Mexico has risen by 7.7 percent in the space of 12-months to a rate of 4.983Bcf/d in January 2020.

PEMEX increased its extraction rates by 6.4 percent while private contracts increased their shares by 39 percent in the same period.

This change signals the growing importance of natural gas in the Mexican energy mix. Seen as a suitable bridging fuel for Mexico, CNH has been outspoken in its support of placing more importance on its extraction.