After the recent declines in prices, it's difficult to sign on to the idea that the market is headed significantly lower still when the news keeps coming out of Mexico about that country's collapsing rate of production.
In the latest report, Mexico said it produced 2.839 million b/d of crude oil in June, down 11.4% on the same month of last year. Worse still, crude exports dropped 20.2% year-on-year to 1.415 million b/d.
Natural gas production rose in June to 7.02 Bcf/d, the highest monthly output on record and 13.4% up on the 2007 month.
Hmmm...what's the difference? Maybe it's that foreign operators are allowed to develop and explore for natural gas in the Burgos Basin, while Pemex continues to stagger along in the oil patch, unencumbered by competition, shipping its revenue up the chain to the government.
Is anybody in Mexico shouting from the rooftops that this situation is headed toward disaster, if they're not there already? Probably not: because of higher prices, Pemex earned $4.86 billion in June, another record, up on $4.39 billion in May and $3.13 billion in June 2007. The average export price for Mexican crude in June was a record $114.50/barrel, up from $103.01/b in May and $60/b in June 2007.
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