Heavy oil prices in the United States rise as supply markets in Mexico arrive

NEW YORK / HOUSTON, Aug 24 (Reuters) – Prices for heavy grades of crude oil have risen on the U.S. Gulf Coast, traders said, as the market prepares for a disruption to Mexico’s supplies ‘a fire that has reduced Pemex’s state oil production by about 25% since Sunday.

At least five workers were killed and six were injured in the blaze, which erupted on a offshore platform in the southern Gulf of Mexico operated by Petroleos Mexicanos (PEMX.UL), which stopped production of more than 400,000 barrels a day. bpd). the company said Monday. Read more

It could take weeks for production and exports to return to normal, people familiar with the matter said, even as work is underway to restore power to the facility on Wednesday and then plug it in. 125 idle wells in the Ku-Maloob-Zaap (KMZ) cluster, the largest in Mexico with an average output of 750,000 bpd.

Pemex did not respond to any requests for comment.

On Monday, chief executive Octavio Romero Oropeza said Mexico’s monthly production and exports could decline, but the overall impact of the crash has not yet been estimated.

Prices for acid crude on the U.S. Gulf Coast, Mexico’s main oil recipient, have begun to rise as refiners begin looking for replacement barrels, traders said.

Before the fire, Mars crude had traded at its weakest levels in about a month, but prices on Tuesday were quoted at a $ 2.35 discount for benchmark futures, dealers said, stronger than of $ 2.65 a day earlier.

Western Canada Select (WCS) in Alberta also began to strengthen on news of the outage, they added.

Chevron Corp (CVX.N), Phillips 66 (PSX.N) and Valero Energy (VLO.N) are expected to receive loads of Mexican crude in the coming days, according to people familiar with the trade.

Valero aims to load a cargo on Tuesday, procuring barrels from Pemex storage tanks at the Pajaritos terminal, they said. The Pemex’s Deer Park, Texas refinery has not been affected, a spokesman said.

Chevron, Phillips 66 and Valero did not respond to requests for comment.

Among the challenges to fully restore production is cleaning up a cloud of natural gas around the facility, said a person familiar with Pemex operations.

EXPORT DELAYS

Refining and trading companies are preparing to delay the delivery of the cargo and the possibility of force majeure by Pemex, traders said.

The accident, which disrupted the supply of gas needed for oil production in the KMZ fields, increasingly threatens the active flow of Mexican oil, especially crude Maya, to the Gulf Coast of the United States, where many refineries use it as the main source of heavy acid crude.

“There will definitely be some issues (with flows and deliveries),” the person familiar with Pemex operations said.

Three traders who are regular buyers of Mayan crude for the United States and Europe said they expect a force majeure warning from Pemex if well production is not reconnected in the next few days.

But it is still unclear whether force majeure or contract suspensions will be needed. Pemex is trying to drain crude inventories from land and sea storage to meet export commitments, sources said.

A former Pemex executive familiar with KMZ’s operations said the cluster has an oil storage capacity that allows for “several days” of autonomy, which could be exhausted before declaring force majeure.

“It’s still premature,” a senior Pemex official said when asked on Tuesday if he would declare force majeure soon.

Reports by Devika Krishna Kumar in New York and Marianna Parraga in Houston, and Ana Isabel Martinez and Stefanie Eschenbacher in Mexico City; additional reports by Erwin Seba and Laura Sanicola Edited by Paul Simao and David Gregorio

Our standards: the principles of trust of Thomson Reuters.