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Triple-Digit W-T-I, but GERN-zee Barrels Still Face a Bottleneck · The Gathering Line

• 0:00
  Sunday, October eighteenth.
• 0:02
  Futures reopen tonight, and the message for the desk is simple: triple digit WTI is
• 0:09
  a headline, not a bid for your uncommitted barrels.
• 0:12
  Global first.
• 0:13
  Front month Brent settled Friday at one hundred nine dollars and eighty six cents,
• 0:18
  up four point nine percent on the week, after touching one hundred dollars and ten
• 0:22
  cents...
• 0:23
  correction, an intraday high of one hundred ten dollars.
• 0:26
  That's the highest close since May nineteenth.
• 0:29
  Physical North Sea Dated is assessed near one hundred thirty four,
• 0:33
  so wet barrels sit at a steep premium to paper.
• 0:36
  Over the weekend, Saudi air defenses intercepted a ballistic missile aimed at Yanbu,
• 0:41
  the Red Sea terminal that bypasses Hormuz.
• 0:43
  Rapidan Energy Group says no structural damage.
• 0:47
  UKMTO reported a commercial tanker hit by an unknown projectile off the Saudi coast,
• 0:52
  and Kpler reports Persian Gulf tanker transits dropping sharply amid Iranian
• 0:56
  threats.
• 0:57
  In Russia, drone strikes suspended a primary distillation unit at Ryazan.
• 1:02
  ExxonMobil says stronger refining margins add four point five billion dollars to
• 1:06
  third quarter downstream earnings, quarter on quarter.
• 1:09
  OPEC plus targets stay frozen through November, ahead of the November first
• 1:13
  ministerial, and the IEA confirmed plans for an emergency stock release of more than
• 1:17
  twenty million barrels.
• 1:19
  North America.
• 1:21
  Western Canadian Select for November at Hardisty closed Friday at twenty five fifty
• 1:25
  to twenty five fifty five under WTI, near multiyear discount lows.
• 1:31
  High dirty tanker freight keeps trans Pacific exports out of Westridge uneconomic,
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  so Trans Mountain throughput stays capped near sixty percent,
• 1:39
  roughly four hundred twenty five thousand barrels per day.
• 1:43
  The part that touches you: Enbridge's Express into Casper is running at one hundred
• 1:47
  percent, two hundred eighty thousand barrels per day, pushing heavy Canadian crude
• 1:52
  into Wyoming.
• 1:54
  Canadian export pipeline utilization is ninety three percent,
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  and winter diluent adds roughly thirty percent by volume to heavy batches,
• 2:01
  crowding line space.
• 2:03
  Mexico, nothing material.
• 2:05
  United States.
• 2:07
  Front month WTI settled Friday at one hundred one dollars and forty one cents.
• 2:12
  That's up three forty four on the day, three point five percent,
• 2:16
  and up ten point four percent on the week, the first settlement above a hundred
• 2:21
  since September seventeenth.
• 2:23
  The Brent WTI spread closed at eight forty five.
• 2:27
  The latest EIA Weekly Report, week ending October ninth, released Thursday the
• 2:32
  fifteenth, showed a national commercial crude draw of eight point five five seven
• 2:36
  million barrels, to four hundred fifteen point five seven seven million.
• 2:41
  Reuters consensus was a modest draw of two hundred eighty eight thousand.
• 2:45
  Big surprise, but read the regions.
• 2:48
  The whole draw was PADD 3, down nine point two three nine million barrels,
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  on five hundred thousand barrels per day of Hurricane Isaias shut ins and heavy
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  exports.
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  PADD 4, the Rockies, built three hundred fifty eight thousand barrels to twenty two
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  point seven one zero million.
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  PADD 2 rose twenty three thousand to one hundred seven point zero zero four million,
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  with autumn turnarounds underway.
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  Utilization is ninety two point seven percent.
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  Cushing was last confirmed at twenty four point seven million barrels.
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  On the SPR, the DOE issued an RFP for up to seventeen million barrels of exchanges
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  for November and December delivery.
• 3:28
  Energy Aspects says about twenty three million barrels were awarded from September's
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  forty million barrel offer, leaving the reserve near two hundred eighty three
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  million, the lowest since October 1982.
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  My read, and it is interpretation: that waterborne Gulf supply satisfies coastal
• 3:45
  refiners and removes the coastal pull on inland rail barrels.
• 3:49
  Baker Hughes had six hundred three total rigs as of October ninth,
• 3:53
  four hundred sixty two oil, one hundred thirty two gas.
• 3:56
  The October sixteenth count I have not confirmed, so I won't give you a number.
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  Deals still pending: Enbridge's two point five five billion dollars for Tallgrass
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  crude assets, and Hess Midstream's two hundred million dollar purchase of Chevron's
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  DJ Basin gathering system, which carries a twenty percent Saddlehorn stake.
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  Uinta Basin.
• 4:15
  Yellow wax wellhead postings are flat at ten to fourteen dollars under Cushing.
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  Delivered yellow wax into the Gulf Coast is indicated near WTI plus three twenty,
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  roughly one hundred four sixty.
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  Heated coiled railcar freight holds at sixteen to eighteen dollars per barrel.
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  Do the math and the basin netback is eighty six sixty to eighty eight sixty,
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  twelve eighty to fourteen eighty under Cushing.
• 4:40
  That does not beat local Salt Lake City postings, so spot wax by rail stays shut.
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  Salt Lake's five refiners are at their technical wax ceiling,
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  eighty thousand barrels per day.
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  Basin rail loadings are flat near one hundred fifteen thousand,
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  moving under legacy minimum volume commitments.
• 4:58
  Energy Transfer's Price River terminal still awaits final Utah air permitting for a
• 5:03
  late fourth quarter start.
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  Wildcat's Helper terminal keeps expanding in phases toward one hundred thousand
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  barrels per day.
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  The Uinta Basin Railway has laid zero track, stuck in the STB remand,
• 5:15
  Forest Service right of way reviews, and Seven County bond structuring.
• 5:19
  Operators report steady field work.
• 5:22
  Don't underwrite spot wax expansions off this tape.
• 5:25
  Bakken.
• 5:26
  The North Dakota Director's Cut holds state output at one point one five three
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  million barrels per day, on thirty three rigs.
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  Gas capture is ninety six percent, flaring near one hundred thirty million cubic
• 5:37
  feet per day.
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  DAPL is full at seven hundred fifty thousand barrels per day.
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  Committed tariffs run five sixteen to seven fifty six per barrel,
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  uncommitted is nine seventy five.
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  Rail to the East Coast or Pacific Northwest costs ten to fifteen dollars all in,
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  which wipes out spot margins even with that eight forty five Brent WTI spread,
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  so loadings stay at contracted baselines.
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  Chevron is taking its Williston rigs from three to two by December to focus on three
• 6:07
  mile laterals, and Hess Midstream projects 2027 gathering throughput down five
• 6:12
  percent before leveling off.
• 6:14
  Chord, Continental and Devon with Grayson Mill are steady.
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  Powder River.
• 6:19
  Anschutz, Continental, Devon, EOG and Peak are stable.
• 6:24
  Gathering has room.
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  The choke point is downstream at GERN-zee.
• 6:29
  Plains continues integrating its five hundred eighty five million dollar Silver
• 6:34
  Creek gathering acquisition.
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  Now the one that matters.
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  GERN-zee sweet is steady at eighty five cents over Cushing,
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  about one hundred two twenty six outright.
• 6:43
  Clearbrook trades a dollar fifty to two ten under GERN-zee,
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  sixty five cents to a dollar twenty five under Cushing.
• 6:50
  That premium looks attractive, and it's uncapturable for uncommitted barrels,
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  because the exits are prorated.
• 6:56
  Pony Express is moving two hundred thirty thousand barrels per day out of GERN-zee
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  against four hundred thirty thousand total capacity, and it's heavily prorated.
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  The Tallgrass and Bridger open season offered incentive tariffs without incremental
• 7:09
  pipe steel.
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  Platte, at one hundred forty five thousand to Wood River and Patoka,
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  faces severe apportionment.
• 7:15
  Saddlehorn and Grand Mesa are full of DJ crude bound for Cushing.
• 7:19
  And Double H's conversion to N-G-L service permanently removed sixty five to eighty
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  eight thousand barrels per day of inbound crude takeaway.
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  Meanwhile, Express lands two hundred eighty thousand barrels per day into Casper at
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  that twenty five fifty discount, and Bridger and Belle Fourche funnel over three
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  hundred thousand barrels per day of Bakken crude toward the hub.
• 7:41
  With PADD 2 refiners in maintenance, surplus barrels get pushed to Clearbrook
• 7:45
  instead of south or to the coast.
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  So expect producers to shop uncommitted spot volume into your racks on the strength
• 7:52
  of a hundred dollar screen.
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  Match receipts to confirmed pipeline nominations, defend your M-V-Cs,
• 7:59
  and police the manifolds.
• 8:01
  That's the brief.
• 8:02
  Back tomorrow.