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Crude Breaks Below $100 and the Bottleneck at Guernsey · The Gathering Line

• 0:00
  Tuesday, October sixth.
• 0:02
  Here's what moved overnight.
• 0:04
  Brent broke under a hundred.
• 0:06
  Reuters has Brent futures down a dollar seventy, one point seven percent,
• 0:10
  at ninety eight dollars and sixty two cents around ten thirteen GMT.
• 0:14
  Earlier in Asia it was ninety nine forty nine, down eighty three cents.
• 0:18
  Monday it was sitting in the one oh one to one oh two range.
• 0:22
  The driver is physical.
• 0:23
  Provisional Kpler data puts the seven day average for Gulf crude exports at eighteen
• 0:28
  point three million barrels per day on September thirtieth,
• 0:31
  and flows excluding Iran ran above eighty one percent of prewar levels for
• 0:35
  September.
• 0:36
  Vortexa's fourteen day average is eighteen point six million.
• 0:40
  Saudi is leading the recovery.
• 0:42
  Aramco cut its Arab Light official selling price into Asia for November loadings,
• 0:46
  and Kuwait says it's back to seventy five percent of prewar output.
• 0:50
  ING reads that as an improving supply picture.
• 0:53
  Add the G seven release of one hundred million barrels of diesel and crude from
• 0:56
  emergency stocks, and you have a ceiling on paper rallies.
• 1:00
  Now, a caveat.
• 1:02
  Nobody should call this normalization.
• 1:05
  Marisks reports the Kuwaiti tanker Kazimah III was hit October first,
• 1:09
  and the Aframax Lipsi was struck October fourth with engine room damage,
• 1:13
  crews safe.
• 1:15
  Reuters counts at least seven tanker incidents in the past week.
• 1:19
  Iranian exports remain effectively blocked by the U.S.
• 1:22
  And on OPEC plus, the seven core members reaffirmed Sunday that November targets
• 1:27
  stay flat.
• 1:29
  December's provisional hundred and eighty thousand barrel per day increase is
• 1:32
  conditional on Iraq and Kazakhstan compensation cuts.
• 1:36
  North America.
• 1:37
  Cenovus is buying Athabasca Oil for five point seven billion Canadian,
• 1:42
  about four billion U.S.
• 1:44
  Good for Canadian supply growth, nothing that moves flows this week.
• 1:48
  Our desk sheet has Western Canadian Select at Hardisty sixteen dollars and sixty
• 1:53
  five cents under W T I, wide, tied to the Midwest refinery turnaround schedule.
• 1:59
  I'd treat that as indicative, not a confirmed settle.
• 2:02
  Express into Casper is fully allocated at two hundred eighty thousand barrels per
• 2:06
  day.
• 2:07
  Trans Mountain is steady near sixty percent utilization.
• 2:10
  Mexican Maya exports remain curtailed.
• 2:13
  United States.
• 2:15
  W T I eased to eighty seven dollars and sixty cents, down a dollar eighty three,
• 2:20
  two point one percent.
• 2:21
  The Brent W T I spread is eleven dollars and two cents, basically flat from Monday.
• 2:27
  That matters because an eleven dollar spread keeps pulling inland barrels toward
• 2:31
  Gulf Coast water, and that pull is what's pressing on every Rockies pipe we'll talk
• 2:35
  about in a minute.
• 2:36
  No scheduled EIA release landed since Monday.
• 2:39
  The Short Term Energy Outlook is out today, and the Weekly Petroleum Status Report
• 2:43
  comes Wednesday.
• 2:45
  For reference, the September outlook had U.S.
• 2:47
  crude output at thirteen point eight million barrels per day this year and fourteen
• 2:52
  point three next year, second half Brent near ninety, and distillate stocks below
• 2:56
  one hundred million barrels.
• 2:58
  Watch whether output gets revised.
• 3:00
  Last week's data had the Rockies, PADD four, drawing eight hundred twenty three
• 3:04
  thousand barrels to twenty two point five million, refinery runs at ninety one point
• 3:08
  four percent, and Cushing near operational bottoms.
• 3:12
  Baker Hughes Friday showed five hundred ninety eight total rigs,
• 3:15
  oil rigs up four to four hundred eleven.
• 3:18
  Corporate: Energy Transfer agreed to buy Vaquero Midstream for two point six three
• 3:23
  billion dollars in cash and stock.
• 3:26
  The market is still digesting Enbridge's two point five five billion dollar purchase
• 3:30
  of Tallgrass's crude business, including seventy five percent of Pony Express,
• 3:34
  per RBN.
• 3:35
  And the administration is expanding access to dyed diesel to ease fuel costs,
• 3:40
  per Reuters.
• 3:42
  Uinta Basin.
• 3:43
  Waxy crude production is steady.
• 3:45
  Here's the arithmetic that matters.
• 3:48
  Yellow wax is fetching a three dollar and twenty cent premium at Gulf Coast
• 3:51
  refiners, but heated rail freight runs sixteen to eighteen dollars a barrel.
• 3:56
  So uncommitted rail is deeply negative, and Salt Lake City refineries,
• 4:00
  capped around eighty thousand barrels per day, can't absorb the rest.
• 4:04
  The Uinta Basin Railway is still stuck.
• 4:07
  After the D C Circuit remand, the Surface Transportation Board proceedings and
• 4:11
  Forest Service right of way reviews are pending.
• 4:14
  The two point two to two point five billion dollar private financing isn't closed,
• 4:18
  and no ground has been broken.
• 4:20
  Operators are on a steady cadence, nothing new.
• 4:23
  Bakken.
• 4:24
  Production is holding between one point one nine and one point two zero million
• 4:28
  barrels per day.
• 4:29
  No new Director's Cut in the past day, and gas capture is reported above ninety five
• 4:33
  percent.
• 4:34
  Dakota Access is near capacity with little spot room south.
• 4:38
  Rail to coastal refineries runs ten to fifteen dollars a barrel,
• 4:42
  so crude by rail stays with contracted buyers.
• 4:45
  On operators, Chord closed its non operated Marcellus sale to focus on the
• 4:49
  Williston, and Hess Midstream is guiding to at least five percent volume growth in
• 4:53
  the second half.
• 4:54
  Powder River.
• 4:56
  Steady rigs from Anschutz, Continental, Devon, EOG, and Peak.
• 5:00
  Plains' five hundred eighty five million dollar Silver Creek gathering deal is still
• 5:04
  being integrated.
• 5:05
  One structural note: RBN had Kinder Morgan's eighty eight thousand barrel per day
• 5:10
  Double H line slated for N G L conversion by the first quarter of this year.
• 5:14
  I can't confirm today's status, but once converted, that Dore to Guernsey crude path
• 5:18
  is gone.
• 5:19
  Now the one that matters.
• 5:21
  Guernsey, GERN zee.
• 5:25
  Light sweet is holding at about eighty five cents over Cushing,
• 5:29
  and roughly two ten over Clearbrook.
• 5:31
  Unchanged on the day.
• 5:33
  Our sheet quotes Clearbrook anywhere from a dollar fifty to two ten under Guernsey,
• 5:39
  so that range is soft.
• 5:41
  Terminal tanks are congested as Bakken, Powder River, and Canadian barrels converge
• 5:46
  on limited southbound capacity.
• 5:49
  Pony Express, about four hundred thirty thousand barrels per day,
• 5:52
  and Platte are both heavily prorated.
• 5:55
  Here's the signal.
• 5:56
  Scheduled pipeline space is trading at a premium to physical barrels in the tank.
• 6:01
  Think about what that says.
• 6:02
  The crude is there.
• 6:04
  The scarce asset is the right to move it.
• 6:06
  A shipper holding space is worth more than one holding oil.
• 6:10
  That's why a Guernsey premium to Cushing, which is rare, can coexist with an eleven
• 6:14
  dollar Brent W T I spread.
• 6:16
  The spread pulls barrels toward the Gulf, but the pipe south is the gate.
• 6:20
  So shippers have three options.
• 6:22
  Take the apportionment on Pony or Platte and capture the Gulf Coast export margin.
• 6:26
  Dump into Clearbrook at about a two dollar discount into Midwest refinery
• 6:30
  turnarounds.
• 6:31
  Or pay ten to fifteen dollars or more for rail.
• 6:33
  Space south out of Guernsey is the top commercial priority.
• 6:37
  One flag on open seasons.
• 6:39
  RBN's reporting on the Tallgrass and Bridger thirty day binding joint open season
• 6:43
  dates to February of twenty twenty five.
• 6:45
  I can't confirm a live one today.
• 6:47
  Bridger's proposed five hundred fifty thousand barrel per day line from the Canadian
• 6:50
  border to Guernsey, per RBN in February, is long term.
• 6:54
  That's the brief.
• 6:55
  Back tomorrow.