MEXICO CITY: Mexico’s decision to raise the price of Maya crude is seen making Canadian crude more competitive, drawing increased volumes down to the U.S. Gulf Coast.
State-owned Petroleos Mexicanos, known as Pemex, reduced the discount for the heavy crude blend sold into the U.S. to $1.20 a barrel in April from $2.95 in March, the biggest increase in a year. U.S. imports of Canadian crude declined over the month ended March 6 as Mexico’s increased, according to U.S. Energy Department data.
This “definitely opens to door for Canada to make up ground here,” Carl Larry, director of oil and gas for Frost & Sullivan LP in Houston, said by phone.
Heavy Western Canadian Select crude sold for $11.73 a barrel cheaper than Maya Wednesday after the discount reached a three-month high of $12.79 on March 3, according to data compiled by Bloomberg.
Imports from Canada fell to 2.9 million barrels a day in the week ended March 6, Energy Information Administration data show. Mexico’s exports to the U.S. rose to 766,000 barrels a day from 616,000 a month earlier.
Rising inventories at Cushing, Oklahoma, the main storage location for U.S. crude and a transit point for Canadian oil, may hinder exports to the Gulf Coast, Larry said.
“If we are not moving crude out of Cushing at any major pace, there is not a lot of wiggle room to bring it now and let it sit,” Larry said. There will be less room to stockpile Canadian crude should pipelines get backed up, he said.
