Crude Prices Rally on Mexican Port Closures, Rebound from Daily Lows

Strategic Insights -

Crude prices in the New York Mercantile Exchange (Nymex) regained strength after news of weather-related port closures along the Mexican coast of the Gulf of Mexico. The February crude contract settled 8 cents higher at $19.89/bbl, with some sources anticipating a potential rally to $20/bbl. This rebound comes after the contract hit a seven-month high of $19.95 and recovered from a low of $19.68. Mexican ports, including key export terminals Dos Bocas, Pajaritos, and Cayo Arcos, were temporarily closed due to high winds and rough seas.

Key Takeaways:

  • The force majeure in the Gulf of Mexico had a significant impact on the market, driving prices up after they had sold off.
  • The closure of 36 Mexican ports in the Gulf of Mexico, including key export ports, led to a rally in crude prices.
  • Mexico exports 1.31 million b/d of crude, with 600,000 b/d leaving from Cayo Aracos, 400,000 b/d from Pajaritos, and 300,000 b/d from Dos Bocas.
  • Mexico also exports 163,000 b/d of refined products, although the exact percentage affected by the force majeure is uncertain.
  • Traders remain optimistic about the future of crude prices, with one source citing a target of $21/bbl.
  • Anticipation of an increase in product stocks in weekly inventory reports temporarily softened gasoline and heating oil prices.
  • The February heating oil contract on Nymex retreated after Tuesday's rally, settling down 0.49 cents at 59.44 cents/gallon.
  • News of workers at BP Oil Co.'s Marcus Hook refinery voting on Tosco Corp.'s plan to lay off workers and cut runs took the wind out of the gasoline contract's sails.

Statistics:

  • Mexico exports 1.31 million b/d of crude oil.
  • 600,000 b/d of crude oil leaves from Cayo Aracos, 400,000 b/d from Pajaritos, and 300,000 b/d from Dos Bocas.
  • Mexico exports 163,000 b/d of refined products.
  • The February crude contract on Nymex settled up 8 cents at $19.89/bbl.
  • The February heating oil contract on Nymex retreated after Tuesday's rally, settling down 0.49 cents at 59.44 cents/gallon.
  • Workers at BP Oil Co.'s Marcus Hook refinery are set to vote on Tosco Corp.'s plan to lay off workers and cut runs.

Sources:

  • Paribas Futures Inc.
  • Petroleos Mexicanos (Pemex)
  • Gerald Energy Inc.
  • New York- based analyst (name not specified)
  • BP Oil Co.