Pemex reported March production this week, confirming that ongoing promises of a recovery in output are still unrealized. Liquids (85% oil, 15% NGL) were down to their lowest level ever, and natural gas output logged a sixth month of sharp declines, down almost 1/2 a BCFD since September. This corresponds with increased imports from the US over the same period.
More gas was added to underground storage this week than was expected, making it more difficult to trim inventories by the end of injection season. A production plateau isn't proving sufficient to reduce inventory surplus, in the absence of favorable weather during the shoulder season. Power burn demand is also below expectation, in part due to low coal prices, low economic growth, and the rise of renewables. Prices were pressured back below $2 for the front month after the EIA release.
Storage levels held at +832 BCF above the 5 year average, concentrated in the south central EIA region.