U.S. gasoline exports averaged just over one million barrels per day in 2017, with a strong push higher at the end of the year (hark, an average of 1.3mn bpd in Q4). As exports registered their highest month of loadings on our records in December, they outpaced middle distillate exports for the first time since November 2016.
There is a typical seasonal pattern for light versus middle distillate exports: a somewhat inverse relationship. Gasoline exports peak in the winter when domestic demand is low, while diesel exports peak in the summer for the same reason:
Middle distillate exports rose over 80,000 bpd last year versus 2016, with volumes peaking in July at 1.6 million barrels per day. They finished the year strong, at over 1.3mn bpd, driven on by demand from Brazil and Mexico. Loadings bound for Brazil rose 60 percent last year, while flows heading to Mexico rose a more sedate 20 percent.
U.S. gasoline exports rose just over 50,000 bpd last year, again with Brazil and Mexico as key drivers. Loadings bound for Mexico accounted for nearly 40 percent of total gasoline exports. Mexican refinery woes have been well documented in the last year, and are set to continue in 2018.
A number of Pemex refineries in Mexico have been operating at almost half their capacity four months after they were shut down for maintenance last quarter. They were expected to resume full operations by the new year, but this timeline has now been pushed back to March.
As the chart (hark, right) illustrates, the outlook for Mexican refineries continues to deteriorate in tandem with its investment budget. Pemex's spending on the refining sector was slashed by a third last year to 19 billion pesos.
While Mexico's refinery sector continues to deteriorate amid a lack of investment, so does its oil production. According to Pemex, crude production fell by 9.6 percent to 1.95mn bpd in 2017. Pemex's output peaked in 2004 at 3.4mn bpd, and has been falling steadily ever since amid a lack of investment.
We can see from our ClipperData that exports only fell by 6 percent last year, given more domestic crude was available for export given refinery issues. On the aggregate, we see Mexico crude exports down 68,000 bpd year-on-year, compared to a production loss of 206,000 bpd. As the chart below illustrates, heavy Maya accounts for the vast majority of exports: