Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Falling Latam fuel demand leaves U.S. refiners without favored export customers

Stock MarketsMar 27, 2020 02:35AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. A long exposure image shows the movement of a crude oil pump jack in the Permian Basin in Loving County 2/2

By Marianna Parraga and Devika Krishna Kumar

MEXICO CITY/NEW YORK (Reuters) - Demand for refined products in Latin America is quickly drying up as the coronavirus pandemic worsens, leaving U.S. refiners without their primary export destination as the virus spreads.

The crisis has nearly shut down worldwide air travel and is destroying fuel demand, which could fall by 15% to 20% globally in coming months.

The virus had not hit Latin America with the same intensity as Europe or the United States, but it is increasingly spreading there, and a growing number of nations are imposing travel restrictions.

The region's largest importers in recent days began cutting orders of fuel cargoes, which are mostly executed on the volatile spot market, as consumption falls, according to sources at trading and refining firms.

Latin America's two largest fuel importers, Petroleos Mexicanos and Brazil's Petrobras (SA:PETR4), have reduced the number of cargoes of gasoline and diesel to be imported in the coming weeks, according to traders.

The United States exported 2.9 million barrels per day of fuel to Latin America and the Caribbean last year, according to the U.S. Energy Information Administration, making the region the largest buyer of American refined products, and a steady customer for U.S. refiners.

In Mexico, which bought 1.19 million bpd of fuel from the United States in 2019, retail demand contracted 15% in the last two weeks, according to its fuel sellers association, Onexpo, while prices began falling at gas stations.

U.S. fuel exports to Latin America have been affected by a "super lockdown," one refined products trader at a global merchant said. Another said exports have been hit as the "world is stopping."

"Most opportunistic purchases motivated by falling prices have disappeared as the largest importers in the region don't have large capacity to store gasoline or diesel," said another trader.

U.S. refiner Phillips 66 (N:PSX) on Tuesday said that some of its Latin American customers were asking if they could back out of purchases, which is one reason the company's refineries are working at reduced rates.

Mexico's largest importer, Pemex, had already cut fuel imports by 14% in January to 733,600 bpd, according to official data. The state firm's fuel imports from the United States have also declined at the expense of new entrants such as ExxonMobil (N:XOM), BP (L:BP) and Valero Energy (N:VLO), said Michael Upchurch, chief financial officer at U.S. railroad company Kansas City Southern (N:KSU), an active shipper of fuels to Mexico.

In Brazil, the largest Latin American buyer of diesel, domestic fuel sales recently fell by an average of 50% in cities with more than 300,000 inhabitants, a union representing more than 40,000 gas stations said on Wednesday. Local Brazilian authorities are trying to restrict travel to combat the virus, even as President Jair Bolsonaro opposed shutdowns.

Venezuela, a regular importer of diluent naphtha, gasoline and diesel, has reduced purchases this month to about half, mainly due to U.S. sanctions limiting the suppliers that can work with state-run PDVSA, but also because of plummeting demand following gas station closures.

In Colombia, state-controlled Ecopetrol (CN:ECO) noticed a fall in domestic fuel demand, which already motivated processing cuts at its Cartagena and Barrancabermeja refineries.

Pemex and PDVSA did not respond to requests for comment. Petrobras declined to comment.

Falling Latam fuel demand leaves U.S. refiners without favored export customers
 

Related Articles

Ted Baker Chairman John Barton dies
Ted Baker Chairman John Barton dies By Reuters - Dec 06, 2021

(Reuters) - British fashion chain Ted Baker on Monday announced the death of Chairman John Barton, and said senior independent director Helena Feltham would take on the role of...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Hec Encinas
Hec Encinas Mar 27, 2020 1:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Mexican government start buying to China
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email