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Middle East Tensions Surge as Guernsey Pipeline Chokepoints Tighten · The Gathering Line

• 0:00
  Tuesday, October thirteenth.
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  Here's what moved.
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  Global first.
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  Prompt Brent settled up two percent Monday at one hundred six dollars and seventy
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  nine cents, per Reuters.
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  That's the highest since September twenty ninth, and it extends the rally from the
• 0:14
  one hundred five dollars and forty one cents we had Monday morning.
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  The driver is the Houthis.
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  They claimed Saturday's strike on King Khalid International Airport in Riyadh,
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  and Reuters has the toll at thirteen dead and more than three hundred injured,
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  with further attacks Sunday.
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  Houthi leadership repeated its threats against Saudi oil facilities.
• 0:32
  The bearish offset got ignored.
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  I C E gasoil fell two point three percent to fourteen hundred forty nine dollars a
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  metric ton after the U S administration said Russia would supply more than three
• 0:42
  hundred thousand metric tons of diesel, roughly two point two five million barrels.
• 0:46
  Crude desks looked past it and priced supply security.
• 0:50
  Today is the OPEC Monthly Oil Market Report.
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  I haven't seen the document, so treat this as the lead in.
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  Secretary General Haitham Al Ghais told the World Petroleum Congress in Riyadh that
• 0:59
  OPEC now sees 2026 demand growth at four hundred thousand barrels per day,
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  down from one point four million at the start of the year.
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  He expects the deferred demand to show up in 2027, and he warned that
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  underinvestment in refining and upstream is already causing bottlenecks.
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  Also from Riyadh, the Saudi energy minister said the kingdom wants pipeline capacity
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  of ten million barrels per day within two to three years, mostly through pumping
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  station upgrades on the East West line.
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  He also described temporarily converting a gas pipeline to carry about one point two
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  million barrels per day of crude for seven to eight weeks, returning to gas by May,
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  with more investment potentially taking it to three million.
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  The East West line restarted September twenty second and reached nearly six million
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  barrels per day by early October, about four and a half million exportable,
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  per Reuters.
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  Aramco's Amin Nasser said onshore commercial inventories globally are below six
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  billion barrels, which he called the last line of defense.
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  North America.
• 1:58
  The Canadian heavy discount is the story.
• 2:01
  Western Canadian Select for November at Hardisty settled Friday at twenty five
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  dollars and fifty five cents under W T I, per CalRock.
• 2:09
  It was twenty dollars and twenty cents under on Thursday, and it's the widest since
• 2:13
  2023.
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  That's the latest print I have.
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  The drivers are soft Gulf Coast heavy fuel oil margins, elevated tanker freight,
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  export pipes running near ninety three percent full, and winter diluent blending,
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  which adds volume to every barrel moved.
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  Express into Casper is full at two hundred eighty thousand barrels per day.
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  Trans Mountain is near sixty percent of capacity, about four hundred twenty five
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  thousand barrels per day through Westridge.
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  Mexico had nothing material.
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  United States.
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  W T I gained one dollar and sixty nine cents, or one point eight percent,
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  to settle at ninety three dollars and fifty four cents.
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  Brent to W T I widened to thirteen dollars and twenty five cents,
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  from twelve ninety nine.
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  Goldman raised its December Brent forecast to ninety dollars from eighty five,
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  citing a risk premium a bit over twenty dollars.
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  It sees W T I at eighty one in December and seventy three in 2027,
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  pointing to high shipping costs between the U S and Europe.
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  No E I A release in this window.
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  The Weekly Petroleum Status Report comes tomorrow.
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  Last week's baseline: commercial crude drew three point two million barrels to four
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  hundred twenty four point one million, against an expected build of one point seven
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  million.
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  Cushing built four hundred forty thousand to twenty four point seven million,
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  still one point eight four million under the five year average.
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  Midwest stocks built one point eight seven million on refinery turnarounds.
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  The Rockies drew one hundred forty four thousand barrels to twenty two point three
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  five million.
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  Utilization averaged ninety two point seven percent.
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  Baker Hughes Friday showed total rigs up five to six hundred three,
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  oil rigs up six to four hundred sixty two.
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  On corporate news, shippers are still digesting Hess Midstream's two hundred million
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  dollar purchase of Chevron's D J Basin gathering system, which carries a twenty
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  percent stake in Saddlehorn and extends Bakken contracts through 2045.
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  Uinta Basin.
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  Yellow wax is indicated ten to fourteen dollars under Cushing.
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  Delivered waxy bids at the Gulf Coast are around three dollars and twenty cents over
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  W T I, or ninety six dollars and seventy four cents.
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  Heated railcars to Gulf refiners run sixteen to eighteen dollars a barrel.
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  That leaves a wellhead netback of seventy eight dollars and seventy four cents to
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  eighty dollars and seventy four cents, twelve eighty to fourteen eighty under
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  Cushing.
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  By my math, that's worse than selling local at the indicated wax discount.
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  So spot rail is shut, and only committed minimum volume term contracts are moving.
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  Salt Lake's five refineries are taking their ceiling of about eighty thousand
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  barrels per day.
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  Rail loadings hold near one hundred fifteen thousand.
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  Energy Transfer's Price River expansion is targeting fourth quarter completion,
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  pending final Utah D E Q permits, and Wildcat is still growing Helper from twenty
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  thousand to one hundred thousand.
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  The Uinta Basin Railway is stalled with no physical construction.
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  The S T B remand is pending, Forest Service right of way is unresolved,
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  and Seven County financing isn't final.
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  Operators are drilling in the normal course.
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  Bakken.
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  Williston production is steady around one point one five to one point two million
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  barrels per day.
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  The latest Director's Cut from Nathan Anderson has North Dakota at one point one
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  five three million, up two point five percent month over month,
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  with thirty three rigs.
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  Gas capture is ninety six point three to ninety six point six percent,
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  roughly one hundred thirty million cubic feet per day flared.
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  Dakota Access is full with negligible spot room.
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  Double H's conversion to N G L service removed sixty five to eighty eight thousand
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  barrels per day of crude egress toward Guernsey, pushing barrels onto D A P L and
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  the Bridger and Belle Fourche systems.
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  Bakken rail to the Pacific Northwest or East Coast costs ten to fifteen dollars,
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  which leaves spot rail netbacks behind pipe even with Brent this wide.
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  Chevron plans to go from three rigs to two in December, and Hess Midstream sees
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  Bakken throughput down roughly five percent in 2027 before it plateaus.
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  Powder River.
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  Anschutz, Continental, Devon, EOG, and Peak are steady, with no new takeaway
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  constraints reported.
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  Plains continues integrating its five hundred eighty five million dollar Silver
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  Creek gathering acquisition into its Guernsey footprint.
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  Now Gern zee, the part that matters.
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  Light sweet is indicatively steady at eighty five cents over Cushing.
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  Clearbrook is assessed one fifty to two ten under Gern zee,
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  which is sixty five cents to a dollar twenty five under Cushing.
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  The problem isn't price, it's space.
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  Pony Express is heavily apportioned, moving about two hundred thirty thousand
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  barrels per day out of Gern zee on a four hundred thirty thousand system.
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  The thirty day binding open season by Tallgrass and Bridger added no incremental
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  capacity.
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  Platte, about one hundred forty five thousand to Wood River and Patoka,
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  is also heavily prorated.
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  Saddlehorn and Grand Mesa keep moving D J barrels south.
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  Here's why it bites.
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  A thirteen dollar and twenty five cent Brent W T I spread pulls every barrel toward
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  the Gulf, and Cushing is the only pipeline route to it.
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  A barrel that can't get space on Pony or Platte has two bad options.
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  Clearbrook puts it into a Midwest market that just built one point eight seven
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  million barrels on turnarounds.
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  Rail costs ten to fifteen dollars, which eats the arbitrage.
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  Apportionment is the bottleneck setting Rockies netbacks.
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  That's the brief.
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  Back tomorrow after the E I A.