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Crude Rally Meets a Rockies Egress Bottleneck · The Gathering Line

• 0:00
  Saturday, October seventeenth.
• 0:02
  Here's what moved since Friday morning.
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  Global first.
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  Brent touched one hundred ten dollars for the first time since May,
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  then settled up three dollars and ninety four cents, or three point seven percent,
• 0:14
  at one hundred nine dollars and eighty six cents.
• 0:17
  That's a four point nine percent gain on the week and the highest settlement since
• 0:21
  May nineteenth.
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  Paper isn't even the tight part.
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  North Sea Dated is holding near one hundred thirty four dollars,
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  so wet barrels remain well above futures.
• 0:31
  The drivers were geopolitical.
• 0:33
  A Saudi led coalition said it intercepted and destroyed a ballistic missile launched
• 0:37
  toward Yanbu, the Red Sea port that serves as the Hormuz bypass.
• 0:42
  Rapidan Energy Group confirmed no structural damage.
• 0:46
  UKMTO reported another commercial tanker hit by an unknown projectile off the Saudi
• 0:50
  coast, and Kpler says intensified Iranian attacks have pushed Gulf tanker flows
• 0:55
  sharply lower.
• 0:57
  In Russia, drone strikes forced the Ryazan refinery to suspend a primary crude unit.
• 1:02
  ExxonMobil said surging refining margins will lift third quarter downstream profit
• 1:07
  by four point five billion dollars over the prior quarter.
• 1:10
  OPEC plus targets stay frozen through November, with the ministerial meeting on
• 1:14
  November first.
• 1:15
  And the IEA confirmed plans to release more than twenty million barrels of emergency
• 1:20
  fuels.
• 1:21
  North America.
• 1:22
  Western Canadian Select for November delivery at Hardisty closed at twenty five
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  dollars and fifty cents to twenty five fifty five under WTI,
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  anchored near multi year discount lows.
• 1:34
  High tanker freight rates keep trans Pacific exports uneconomic,
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  so Trans Mountain is running at roughly sixty percent, about four hundred twenty
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  five thousand barrels per day to Westridge.
• 1:45
  Overall Canadian egress is ninety three percent utilized, and the Express Pipeline
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  into Casper is at one hundred percent, two hundred eighty thousand barrels per day.
• 1:54
  Winter diluent blending adds roughly thirty percent in volume to heavy batches,
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  which crowds pipe space further.
• 2:01
  Mexico, nothing material.
• 2:03
  United States.
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  There was no scheduled EIA release since Thursday, so that report is still our
• 2:09
  baseline.
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  Front month WTI jumped three dollars and forty four cents, three point five percent,
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  to settle at one hundred one dollars and forty one cents.
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  That's the first close above one hundred since September seventeenth,
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  and a ten point four percent gain on the week.
• 2:25
  The Brent WTI spread narrowed slightly to eight dollars and forty five cents.
• 2:30
  On the Strategic Petroleum Reserve, the pending tranche we flagged Friday morning
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  landed.
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  Friday afternoon the Department of Energy issued a request for proposals for an
• 2:40
  exchange of up to seventeen million barrels, for November and December delivery.
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  Energy Aspects says that confirms roughly twenty three million barrels were quietly
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  awarded from the forty million barrel September offer.
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  That leaves the reserve near two hundred eighty three million barrels,
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  the lowest since October of 1982.
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  On the rig count, I can't give you a confirmed headline number for the October
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  sixteenth print, so I won't guess.
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  The last figures I can verify are from October ninth: six hundred three total rigs,
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  four hundred sixty two oil, one hundred thirty two gas.
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  The read is discipline.
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  No aggressive drilling spike, even with WTI at a hundred.
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  From Thursday's EIA report: commercial crude is at four hundred fifteen point five
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  seven seven million barrels, an eight point five five seven million barrel draw,
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  against a Reuters poll that expected a draw of just two hundred eighty eight
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  thousand.
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  The draw was concentrated in PADD three, tied to five hundred thousand barrels per
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  day of Hurricane Isaias shut ins.
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  PADD four, the Rockies, built three hundred fifty eight thousand barrels to twenty
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  two point seven one zero million.
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  PADD two built twenty three thousand to one hundred seven million,
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  with autumn turnarounds under way.
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  Refinery 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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  Two deals still pending close: Enbridge's two point five five billion dollar
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  purchase of Tallgrass crude assets, and Hess Midstream's two hundred million dollar
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  acquisition of Chevron's DJ Basin gathering system, which carries a twenty percent
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  Saddlehorn stake.
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  Uinta Basin.
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  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 dollars
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  and twenty cents, roughly one hundred four dollars and sixty cents.
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  Heated coiled railcar freight to the Gulf runs sixteen to eighteen dollars per
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  barrel, which puts basin netbacks between eighty six sixty and eighty eight sixty,
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  or twelve eighty to fourteen eighty under Cushing.
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  That does not beat local Salt Lake City postings, so spot crude by rail stays shut
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  and loadings are limited to minimum volume commitments.
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  Salt Lake's five refiners are at their technical wax ceiling,
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  about eighty thousand barrels per day, and basin rail loadings hold near one hundred
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  fifteen thousand.
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  On infrastructure, Energy Transfer's Price River terminal awaits final air
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  permitting for a late fourth quarter start.
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  Wildcat Midstream keeps phasing Helper from twenty thousand toward one hundred
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  thousand barrels per day.
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  The Uinta Basin Railway has laid zero track, with Surface Transportation Board
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  remand proceedings, Forest Service right of way reviews, and Seven County bond
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  structuring all still dragging.
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  Operators report steady field work.
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  Bakken.
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  Per the Director's Cut, production is one point one five three million barrels per
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  day on thirty three active rigs.
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  Gas capture is ninety six percent, with flaring averaging one hundred thirty million
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  cubic feet per day.
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  Dakota Access is full at seven hundred fifty thousand barrels per day,
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  committed tariffs five sixteen to seven fifty six, uncommitted nine seventy five.
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  Crude by rail to the East Coast or Pacific Northwest runs ten to fifteen dollars all
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  in, and that wipes out spot margins even with an eight forty five Brent WTI spread.
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  Chevron is taking its Williston rigs from three to two by December to drill three
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  mile laterals, and Hess Midstream projects 2027 gathering volumes down roughly five
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  percent before leveling off.
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  Chord, Continental, and Devon, with Grayson Mill, are steady.
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  Powder River.
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  Activity is stable across Anschutz, Continental, Devon, EOG,
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  and Peak.
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  Gathering has room.
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  The choke point is downstream at Guernsey.
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  Plains is integrating its five hundred eighty five million dollar Silver Creek
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  gathering purchase.
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  Now Gernzee, the one that matters.
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  Screen postings are steady at eighty five cents over Cushing,
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  around one hundred two twenty six outright.
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  Clearbrook trades one fifty to two ten under Gernzee, which is sixty five cents to a
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  dollar twenty five under Cushing.
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  Both steady.
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  Southbound capacity is the story.
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  Pony Express is prorationed, with two hundred thirty thousand barrels per day of its
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  four hundred thirty thousand total leaving Gernzee.
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  Platte, at one hundred forty five thousand to Wood River and Patoka,
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  is heavily apportioned.
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  Saddlehorn and Grand Mesa are full of DJ barrels headed to Cushing.
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  And the Double H conversion to NGL service permanently stripped sixty five to eighty
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  eight thousand barrels per day of crude inflow.
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  Here's the problem, and it's interpretation, not a number.
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  Hundred dollar WTI doesn't reach inland barrels.
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  Express is landing two hundred eighty thousand barrels per day of Canadian crude at
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  a twenty five fifty discount into Casper, right above Gernzee.
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  The seventeen million barrel SPR exchange serves Gulf refiners on the water,
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  which blunts coastal pull on inland crude.
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  Midwest refiners are in turnaround and southbound pipes are prorationed.
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  So pipeline arbitrage isn't your edge.
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  The value sits in basin tankage margin and quality blending at Gernzee,
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  where cheap Canadian barrels meet domestic sweet streams.
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  That's the brief.
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  Good luck on the call.