Higher Flows Amid Mexican Refinery Woes

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The Mexican government is falling short on its promises for the energy sector once again. President Andres Manuel Lopez Obrador (AMLO) vowed to considerably increase refinery runs earlier this year, and despite a rebound in April, Mexican crude processing has tumbled to 534,000 bpd in July.

Mexico has meanwhile experienced a steady increase in clean product imports, after hitting lows in June due to the demand crimp of Covid-19. Falling refinery runs have spurred on higher imports as industrial activity has rebounded in recent months. Imports still remain below pre-coronavirus levels, however, signaling the economy and consumer behavior has not returned to where it was prior to the outbreak.

Strong Mexican crude exports in August  – at their highest since early 2019 – are furiously pointing to refining activity being weak again this month, with this hypothesis being endorsed by stronger clean products imports.

While the US is the primary beneficiary of higher Mexican crude exports, higher flows are also bound for East Asia and storage in the Caribbean.