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Gulf Draw, Rockies Build: GERN-zee Takeaway Sets the Trade · The Gathering Line

• 0:00
  Friday, October sixteenth.
• 0:02
  Here's what moved, and what it means for your barrels.
• 0:05
  Global first.
• 0:07
  Brent futures are consolidating near one hundred three dollars and seventy eight
• 0:10
  cents after Thursday's two dollar twenty eight slide, down two point two percent.
• 0:15
  Physical is a different story.
• 0:17
  The I E A's October Oil Market Report put North Sea Dated near one hundred thirty
• 0:22
  four dollars, so paper is soft while wet barrels stay tight.
• 0:26
  In the Gulf, Saudi Aramco says field, pipeline, and export operations are fully
• 0:31
  operational after Tuesday night's missile strike on Dhahran,
• 0:34
  though floors six through ten of the executive complex took severe structural
• 0:38
  damage.
• 0:39
  Houthi leadership repeated threats against Saudi energy assets.
• 0:43
  In Hormuz, two commercial vessels were sunk after projectile strikes,
• 0:47
  so transit risk stays critical.
• 0:50
  The I E A sees twenty twenty six demand contracting by two point six million barrels
• 0:54
  per day, with fourth quarter down two point five million, and diesel is a quarter of
• 0:58
  that drop.
• 1:00
  September supply rose two point five million to one hundred two point three million
• 1:03
  barrels per day, led by Saudi Arabia, but full year supply is still five point eight
• 1:08
  million below twenty twenty five, and observed stocks sit five hundred nine million
• 1:12
  barrels under pre war baselines.
• 1:15
  OPEC plus targets are unchanged through November.
• 1:17
  Next ministerial is November first.
• 1:20
  North America.
• 1:21
  Western Canadian Select for November at Hardisty is trading twenty five fifty to
• 1:26
  twenty five fifty five under W T I, near multi year lows.
• 1:30
  Tanker freight is shutting the Pacific export arbitrage, so Trans Mountain is
• 1:35
  running around sixty percent, roughly four hundred twenty five thousand barrels per
• 1:38
  day to Westridge.
• 1:40
  Total Canadian egress sits near ninety three percent.
• 1:43
  Express south into Casper is full at two hundred eighty thousand barrels per day,
• 1:48
  and seasonal diluent adds about thirty percent to heavy batches,
• 1:51
  which tightens line space further.
• 1:54
  Mexico, nothing material.
• 1:56
  United States.
• 1:57
  Thursday's delayed E I A print is the one we flagged yesterday,
• 2:01
  and here's the answer.
• 2:02
  Headline: national commercial crude drew eight point five five seven million barrels
• 2:07
  to four hundred fifteen point five seven seven million.
• 2:11
  Expectations were flat to a modest change, and the A P I had pointed to a bigger
• 2:15
  draw, eleven point one two million.
• 2:18
  But that draw was entirely a Gulf Coast event.
• 2:21
  PADD Three fell nine point two three nine million barrels to two hundred thirty four
• 2:26
  point three five nine million, on export pull and Hurricane Isaias shut ins of about
• 2:31
  five hundred thousand barrels per day offshore.
• 2:34
  PADD Four, the Rockies, built three hundred fifty eight thousand barrels to twenty
• 2:38
  two point seven one zero million.
• 2:40
  PADD Two edged up twenty three thousand to one hundred seven point zero zero four
• 2:45
  million.
• 2:46
  PADD Five built six hundred thirty three thousand, and PADD One drew three hundred
• 2:50
  thirty one thousand.
• 2:52
  So if a counterparty waves the national draw at you to argue for a spot rail surge
• 2:58
  or wider inland basis, the Rockies number says otherwise.
• 3:02
  Elsewhere, W T I prompt is around ninety three seventy five,
• 3:07
  leaving the Brent to W T I spread wide at ten dollars and three cents.
• 3:12
  The Strategic Petroleum Reserve stands at two hundred eighty three million barrels,
• 3:16
  lowest since October nineteen eighty two, with the D O E's forty million barrel
• 3:21
  exchange for November and December delivery still pending.
• 3:25
  Refinery utilization last logged ninety two point seven percent.
• 3:29
  Cushing's last read I can confirm is twenty four point seven million,
• 3:33
  up four hundred forty four thousand the prior week.
• 3:36
  I don't have a confirmed Cushing number from this print, so I won't guess.
• 3:40
  Baker Hughes is due at eleven Mountain.
• 3:42
  The October ninth print was six hundred three total rigs, up five,
• 3:47
  oil rigs up six to four hundred sixty two.
• 3:50
  On deals, Enbridge's two point five five billion dollar Tallgrass purchase and Hess
• 3:55
  Midstream's two hundred million dollar buy of Chevron's D J gathering,
• 3:59
  including a twenty percent Saddlehorn interest, both remain pending.
• 4:03
  Uinta Basin.
• 4:04
  Yellow wax wellhead postings are steady at ten to fourteen dollars under Cushing.
• 4:09
  Delivered wax bids on the Gulf Coast are indicated near W T I plus three twenty,
• 4:14
  about ninety seven dollars.
• 4:16
  Heated coiled railcar freight to the Gulf runs sixteen to eighteen dollars,
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  which compresses in basin netbacks to roughly seventy eight to eighty one dollars,
• 4:24
  twelve seventy five to fifteen seventy five under Cushing.
• 4:27
  That does not beat Salt Lake City postings, so spot crude by rail stays shut.
• 4:32
  Salt Lake refiners are at their wax processing ceiling of about eighty thousand
• 4:36
  barrels per day.
• 4:38
  Basin rail loadings are flat near one hundred fifteen thousand,
• 4:41
  moving under legacy minimum volume commitments.
• 4:44
  Energy Transfer's Price River terminal targets a late fourth quarter start,
• 4:48
  waiting on final Utah air permits.
• 4:50
  Wildcat keeps phasing Helper from twenty thousand toward one hundred thousand
• 4:54
  barrels per day.
• 4:55
  The Uinta Basin Railway has zero track laid.
• 4:58
  The Supreme Court's May twenty twenty five ruling narrowed N E P A review,
• 5:02
  but the project is still waiting on Surface Transportation Board remand proceedings,
• 5:06
  Forest Service right of way approvals, and bond financing.
• 5:09
  Operators Veren, Ovintiv, Scout, XCL, Berry, and SM Energy report no disruptions.
• 5:16
  Bakken.
• 5:17
  The Director's Cut holds state output at one point one five three million barrels
• 5:22
  per day across thirty three rigs.
• 5:24
  Gas capture is ninety six percent, flaring near one hundred thirty million cubic
• 5:29
  feet per day.
• 5:30
  Dakota Access is full at seven hundred fifty thousand barrels per day,
• 5:34
  committed tariffs five sixteen to seven fifty six, uncommitted nine seventy five.
• 5:40
  Rail to the Pacific Northwest or East Coast runs ten to fifteen dollars all in,
• 5:45
  and even with a ten dollar Brent premium that eats the margin,
• 5:48
  so spot loadings stay muted.
• 5:50
  Chevron is dropping Williston rigs from three to two by December,
• 5:54
  favoring three mile laterals, and Hess Midstream guides twenty twenty seven
• 5:58
  gathering throughput down about five percent before it levels off.
• 6:03
  Continental, Chord, and Devon Grayson Mill are steady.
• 6:06
  Powder River.
• 6:08
  Nothing new.
• 6:09
  Anschutz, Continental, Devon, EOG, and Peak hold their cadence,
• 6:14
  gathering has room, and the friction is downstream.
• 6:18
  Plains continues integrating the five hundred eighty five million dollar Silver
• 6:23
  Creek gathering deal.
• 6:25
  Now Gernzee, the section that matters.
• 6:27
  Gernzee is on screens at eighty five cents over Cushing.
• 6:31
  I don't have a confirmed direction on that move, so take it as a level.
• 6:35
  Clearbrook is assessed one fifty to two ten under Gernzee, sixty five cents to a
• 6:40
  dollar twenty five under Cushing.
• 6:42
  But that eighty five cents is uncapturable for uncommitted barrels,
• 6:46
  because the southbound pipes are prorated.
• 6:49
  Pony Express has four hundred thirty thousand barrels per day of capacity,
• 6:52
  moving about two hundred thirty thousand from Gernzee, and remains heavily
• 6:56
  apportioned.
• 6:57
  The Tallgrass and Bridger open season offered incentive tariffs but no incremental
• 7:02
  steel.
• 7:03
  Platte, around one hundred forty five thousand to Wood River and Patoka,
• 7:06
  faces severe proration.
• 7:09
  Saddlehorn and Grand Mesa are full of D J production bound for Cushing.
• 7:13
  And the Double H conversion to N G L service permanently removed sixty five to
• 7:18
  eighty eight thousand barrels per day of crude takeaway into Gernzee.
• 7:21
  So where do barrels clear?
• 7:23
  Northeast, onto Bridger, Belle Fourche, and Enbridge's North Dakota system into
• 7:29
  Clearbrook, which is running above ninety percent, feeding PADD Two refiners in fall
• 7:34
  maintenance rather than a depleted Gulf Coast.
• 7:37
  For the call: spot rail is closed in both basins, southbound steel is apportioned,
• 7:44
  and the draw was Gulf only.
• 7:46
  Protect revenue with contracted volume commitments and northern pipe clearing,
• 7:51
  not coastal arbitrage.
• 7:53
  That's the brief.