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Surging Brent, Gulf Shut-Ins, and Guernsey Bottlenecks · The Gathering Line

• 0:00
  Thursday, October eighth.
• 0:02
  Here's what moved, and what it means for Rockies and Bakken barrels.
• 0:06
  Global first.
• 0:07
  Brent traded at one hundred five dollars and seventeen cents,
• 0:10
  up four point nine six percent, nearly five dollars on the day,
• 0:14
  per Trading Economics.
• 0:16
  Fortune had it as high as one oh eight thirty three early this morning.
• 0:20
  The driver is geopolitical.
• 0:22
  There are reports that the White House directed the Pentagon to prepare strike
• 0:25
  options against Iran, with the president saying he no longer seeks a diplomatic
• 0:29
  agreement.
• 0:31
  On top of that, the Houthis stepped up drone and ballistic strikes on Saudi
• 0:34
  infrastructure, and Gulf tanker harassment continues.
• 0:38
  Then there's the Gulf of Mexico.
• 0:39
  The Marine Minerals Administration says twenty five point one percent of oil output,
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  more than five hundred ten thousand barrels per day, is shut in ahead of Isaias,
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  along with sixteen point four percent of gas, as BP, Shell,
• 0:52
  and Chevron evacuate platforms.
• 0:55
  Two counterweights.
• 0:56
  Saudi Aramco cut its Asian official selling prices to five dollars below the
• 1:00
  regional benchmark, and the I E A opened preliminary talks on a coordinated hundred
• 1:05
  million barrel stock release.
• 1:07
  Talks only, nothing agreed.
• 1:08
  Nothing new from OPEC plus.
• 1:11
  North America.
• 1:13
  Western Canadian Select at Hardisty is still around sixteen dollars and sixty five
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  cents under W T I, weighed down by autumn refinery maintenance in the Midwest.
• 1:22
  Canadian export pipelines have roughly three hundred fifty thousand barrels per day
• 1:26
  of spare room, about ninety three percent system utilization.
• 1:30
  Trans Mountain is running near sixty percent, and Express into Casper is fully
• 1:34
  booked at two hundred eighty thousand barrels per day.
• 1:37
  Winter condensate blending will tighten effective capacity further.
• 1:41
  Alberta and Ottawa signed a memorandum of understanding on new oil sands corridors,
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  but midstream analysts say nothing major commissions before twenty thirty.
• 1:50
  Nothing material from Mexico.
• 1:52
  United States, and the official Energy Information Administration numbers confirmed
• 1:57
  what the A P I hinted at, only steeper.
• 2:00
  For the week ended October second, commercial crude drew three point one eight six
• 2:04
  million barrels to four hundred twenty four point one three million.
• 2:08
  A P I had estimated a two point one million barrel draw.
• 2:12
  I don't have a confirmed consensus figure, so I won't frame the surprise against
• 2:15
  one.
• 2:16
  The regional split matters more.
• 2:18
  Cushing diverged and built four hundred forty thousand barrels to twenty four point
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  seven million, from twenty four point three, still about one point eight four
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  million under its five year average.
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  The Midwest built one point eight seven two million to one hundred six point nine
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  eight million, on turnaround season.
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  The Gulf Coast fell three point eight nine eight million to two hundred forty three
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  point six million.
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  And the Rockies, PADD four, drew one hundred forty four thousand barrels to twenty
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  two point three five million.
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  The Strategic Petroleum Reserve fell seven hundred eighty thousand barrels to two
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  hundred eighty three million, near multi decade lows.
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  Refinery utilization rose two tenths of a point to ninety two point seven percent.
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  Production held essentially flat at thirteen point nine eight million barrels per
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  day, up twenty four thousand, while net imports fell fifty three thousand to two
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  point zero eight million.
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  W T I is at ninety two dollars and seventy two cents, up four forty four,
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  or five point oh three percent, and the Brent W T I spread widened to twelve dollars
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  and forty six cents.
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  That keeps the incentive pointed at Gulf Coast export docks.
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  Uinta Basin.
• 3:24
  Waxy crude is trading ten to fourteen dollars under W T I at the wellhead,
• 3:29
  which is tighter than the thirteen to seventeen dollar historical range.
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  Gulf Coast refiners will pay an indicative three dollars and twenty cents premium
• 3:37
  for paraffinic yellow wax.
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  But spot rail freight in coiled, insulated cars runs sixteen to eighteen dollars per
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  barrel, so spot crude by rail doesn't work.
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  Salt Lake City's five refineries take about eighty thousand barrels per day of local
• 3:51
  waxy crude, out of roughly two hundred five thousand barrels per day of operable
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  capacity, and that caps truck deliveries.
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  The Uinta Basin Railway is still stalled after the D.C.
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  Circuit remand.
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  Surface Transportation Board supplemental review and Forest Service right of way
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  approvals are pending, and the two point two to two point five billion dollar
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  private financing package is not finalized.
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  Operators, from Crescent Point and Veren through SM Energy,
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  are focused on contracted baseline volumes.
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  Nothing new there.
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  Bakken.
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  North Dakota is steady near one point one four million barrels per day,
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  ninety seven point four percent from the Bakken and Three Forks.
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  Gas capture holds at ninety five point five percent statewide,
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  even with a record gas to oil ratio of three point oh nine M C F per barrel.
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  Long laterals of three to four miles are now sixty three percent of completed wells.
• 4:44
  Dakota Access is running near capacity with negligible spot room southward.
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  Kinder Morgan's conversion of the eighty eight thousand barrel per day Double H line
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  to N G L service is pushing incremental crude toward Bridger.
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  Steel Reef applied to FERC for a border connection to move unprocessed North Dakota
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  gas into Saskatchewan.
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  Crude by rail to coastal hubs runs ten to fifteen dollars per barrel,
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  so rail is limited to legacy commitments.
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  Powder River Basin.
• 5:11
  Anschutz, Continental, Devon, EOG, and Peak showed no material change overnight.
• 5:16
  With Double H leaving crude service, local gathering, supported by Plains'
• 5:21
  acquisition of the Silver Creek assets, feeds straight into Gern zee interconnects.
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  Now Gern zee, the section that matters.
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  Light sweet Gern zee is firm, roughly eighty five cents over Cushing,
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  and holds a premium of one fifty to two ten over Clearbrook.
• 5:37
  I don't have a confirmed direction of move for either spread,
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  so treat those as levels, not momentum.
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  What's clearer is the pipe.
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  Pony Express, at four hundred thirty thousand barrels per day,
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  and Platte remain heavily apportioned, and pipeline space is trading at a real
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  premium to the barrels themselves, as shippers chase that twelve forty six Brent W T
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  I arbitrage.
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  Bridger filed a tariff offering interim capacity from the Bakken into Gern zee,
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  moving over two hundred fifty thousand barrels per day into Wyoming,
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  while evaluating a downstream expansion of up to two hundred thousand.
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  That is from a filing, not a commissioned project, so watch for an open season.
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  Here's the netback math a Gern zee shipper is facing.
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  Option one, accept the apportionment on Pony Express or Platte and reach Gulf Coast
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  netbacks.
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  Option two, send barrels east to Clearbrook at that one fifty to two ten discount,
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  into a Midwest already building crude by one point eight seven million barrels on
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  maintenance.
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  Option three, pay ten to fifteen dollars per barrel for rail.
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  Apportionment still delivers the best netback, even with space rationed.
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  Which means the squeeze shows up in pipeline space value, not in the barrel price.
• 6:45
  That's the brief.