The pandemic may be receding in some parts of the world, but it is still ravaging Mexico and Brazil, presenting another challenge to U.S. refiners as the two countries are among their key export markets.
Bloomberg reports that Gasoline consumption in Mexico slumped to the lowest in eight months in January this year, and diesel sales in Brazil dropped to the lowest since May last year.
Normally, Mexico accounts for two-thirds of U.S. gasoline exports, but with consumption dropping amid the pandemic, this is going to change. Demand for U.S. fuels in Latin America is also under threat because of the pandemic's development in the largest country in the region.
Brazil's daily death toll from the coronavirus broke yet another record, bringing the total to over 250,000, and a new variant of the virus that emerged there last year is proving a lot more contagious, including for people who already had the original strain.
Mexico is so overwhelmed with Covid-19 patients that there is a shortage of oxygen tanks. Yet, the government has relaxed pandemic-related restrictions in several states although the border with the United States remained closed.
All this is bad news for U.S. refiners who are still struggling to resume normal operations after the power outages and forced shutdowns caused by the winter storms that hit Texas last month.
There is, however, good news as well, and it is that domestic demand for fuels is set to improve further thanks to vaccinations.
"The U.S., which lagged behind Latin America in terms of fuel demand last year, is set to surge ahead in the second quarter amid a faster vaccination rollout," Bloomberg quoted Wood Mackenzie analyst Paula Jara as saying. Jara expects gasoline demand in the U.S. to rise by 700,000 bpd in the second quarter of the year from the first.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com More