Mexican mix falls 10.59% in November

The price of the Mexican export mix fell 10.59% during November and is at levels at the beginning of January, pressured by the expectation of lower demand for oil due to concerns about global economic activity.

On Monday, Mexican crude hit its second lowest level of 2022, below $70 a barrel. However, it recovered in the last two days and closed the month at 72.77 dollars on optimism about the Chinese economy, the weakness of the dollar and signs that demand could be reduced.

For the month, WTI fell 6.91% to $80.55 per barrel and North Sea Brent fell 9.91% to $85.43.

Gabriela Siller, director of Analysis at Banco Base, explained that crude oil was pressured by the expectation of lower demand in the face of a possible recession in the United States with high interest rates and the Zero Covid policy in China that will slow down economic activity in the asian nation.

“Losses were limited given the weakening dollar, the expectation of smaller Fed rate hikes, and the possibility that China’s Zero Covid policy could be scaled back,” he said.

In November, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) cut its estimate of crude demand for 2023. It estimates a demand of 101.82 million barrels per day. In October, it forecast 102.02 million barrels per day.

However, despite the cut, the oil cartel still anticipates a 2.24% growth in demand compared to 2022 (99.57 million barrels per day). For 2022, it also revised its estimates downward, since last month it anticipated a demand for this year of 99.67 million barrels per day.

Gabriela Siller stressed that the drop in the commodity in November is also explained by the cap on the price of Russian oil that the Group of 7 (G7) plans to apply. A week ago, diplomats from the group’s countries said that the ceiling for Ural crude could be between 65-70 dollars per barrel, higher than the level at which it is trading on the market (58.38 dollars per barrel), which which eased the market because Russia had threatened to limit its supply if the cap was below the market price.

unseen levels

It was the fear of a significant drop in the supply and production of Russian crude that caused prices to rebound days after the start of the war between Russia and Ukraine, reaching maximums not seen in seven years.

WTI and Brent came to trade above $120 per barrel on March 8 and the Mexican mix rose to $119.62. Since those highs, the mix is ​​down 39.17%, and WTI and Brent are down 34.88 and 33.25%, respectively.

This Wednesday, the three benchmarks closed the month with gains in the session. WTI gained 3.01%, Brent 2.89%, while the mix advanced 2.72 percent.

Eward Moya, an analyst at Oanda, assured that the operators see two elements that would support the prices of the raw material in the following days: the decision of Opec+ that it could opt for a new production cut at its meeting on Sunday, as well as the difficulties of the European Union in agreeing a ceiling price for Russian oil.

US reformulated gasoline futures fell 5.57% over the past month, at $2.38 per gallon.

sebastian.diaz@eleconomista.mx