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Guernsey Bottlenecks and the $100 Brent Rebound · The Gathering Line

• 0:00
  Wednesday, October seventh.
• 0:02
  Here's what moved overnight and what it means for Rockies and Bakken barrels.
• 0:06
  Global first.
• 0:08
  Brent rebounded back over one hundred dollars this morning,
• 0:11
  trading between one hundred one twenty six and one hundred one seventy.
• 0:15
  That's up a dollar twelve on the day, and it erases Tuesday's drop to ninety eight
• 0:19
  sixty two.
• 0:20
  The catalyst is physical transit risk in the Gulf.
• 0:23
  U K M T O now counts nine tanker incidents in the Strait of Hormuz so far this
• 0:28
  month, up from seven yesterday.
• 0:30
  Separately, the Saudi led coalition said it intercepted and destroyed a Houthi
• 0:34
  ballistic missile aimed at Khamis Mushait.
• 0:37
  The counterweight is on the supply side.
• 0:40
  Saudi Arabia's Ministry of Energy says the East West pipeline is back to five point
• 0:44
  eight million barrels per day of pumping capacity after repairs.
• 0:48
  And EIA estimates Middle East shut ins fell to four point eight million barrels per
• 0:52
  day in September, down from five point eight in August and ten point nine at the May
• 0:56
  peak.
• 0:57
  On OPEC plus, core members kept November targets unchanged.
• 1:01
  December's provisional increase of one hundred eighty thousand barrels per day stays
• 1:05
  contingent on Iraqi and Kazakh compensation cuts.
• 1:08
  North America.
• 1:10
  Western Canadian Select at Hardisty is indicatively around sixteen sixty five under
• 1:14
  W T I, still wide, and the reported driver is Midwest refinery turnaround schedules.
• 1:20
  Express Pipeline into Casper remains fully allocated at two hundred eighty thousand
• 1:24
  barrels per day.
• 1:25
  Trans Mountain is steady at roughly sixty percent utilization.
• 1:28
  Mexico: Maya exports remain curtailed, and the Esentia pipeline integration linking
• 1:34
  Permian gas to the Pacific coast is getting attention.
• 1:37
  Nothing there changes your day.
• 1:38
  United States.
• 1:40
  Lead item is yesterday afternoon's October Short Term Energy Outlook from EIA.
• 1:45
  Brent is forecast to average one hundred five dollars in the fourth quarter,
• 1:49
  fourteen dollars above last month's outlook.
• 1:52
  EIA cites persistent transit volatility and extreme tightness in diesel markets.
• 1:57
  Full year 2026 Brent is ninety six dollars, falling to eighty four in 2027.
• 2:03
  U.S.
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  crude production is raised to thirteen point nine million barrels per day for 2026,
• 2:07
  up a tenth, and fourteen point three million for 2027.
• 2:12
  Global inventories drew one point nine million barrels per day in the third quarter,
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  with another point seven million projected for the fourth, before big builds in
• 2:19
  2027.
• 2:21
  East Coast distillate sat thirty two percent below the five year average in
• 2:24
  September, and EIA sees it twenty to thirty percent below through winter.
• 2:28
  Retail diesel averaged six twenty nine in September and stays above six dollars in
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  October.
• 2:34
  W T I front month climbed to ninety dollars and eighteen cents,
• 2:37
  up seventy four cents, recovering from Tuesday's eighty seven sixty settle.
• 2:41
  That leaves Brent over W T I at eleven dollars fifty two, and that spread is the
• 2:46
  economic pull sending inland barrels toward Gulf Coast export docks.
• 2:50
  A P I reported a commercial crude draw of two point one million barrels last night.
• 2:54
  The official EIA weekly report lands at ten thirty Eastern,
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  so I'll hold the print for tomorrow.
• 2:59
  I don't have a consensus number in front of me, so I won't characterize a surprise.
• 3:03
  For reference, last week P A D D four stocks drew eight hundred twenty three
• 3:07
  thousand barrels to twenty two point five million, and P A D D four refinery
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  utilization was ninety one point four percent.
• 3:13
  Two more items.
• 3:14
  RBN says record crack spreads in 2026 eased slightly in early October after
• 3:19
  September's spike, but the Gulf Coast three two one is still more than two and a
• 3:23
  half times last October's average.
• 3:25
  And the market is still digesting Enbridge's two point five five billion dollar
• 3:30
  purchase of Tallgrass crude assets, including seventy five percent of Pony Express,
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  plus Energy Transfer's two point six three billion dollar Vaquero Midstream deal.
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  Uinta Basin.
• 3:41
  The math on yellow wax still doesn't work for spot rail.
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  Wax commands a three dollar twenty premium at Gulf Coast refineries,
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  but insulated, heated rail car transport runs sixteen to eighteen dollars a barrel.
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  Uncommitted spot crude by rail is deeply negative against local sales.
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  Salt Lake City refiners remain capped at about eighty thousand barrels per day of
• 4:01
  regional wax intake, so that's the ceiling on the local outlet.
• 4:05
  On the Uinta Basin Railway, nothing new.
• 4:08
  After the D.C.
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  Circuit remand, the Surface Transportation Board's supplemental review and the
• 4:12
  Forest Service right of way reviews are pending.
• 4:15
  The two point two to two point five billion dollar private financing package isn't
• 4:19
  finalized, and construction hasn't begun.
• 4:22
  Operator activity from Crescent Point and Veren, Ovintiv, Scout,
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  XCL, Uinta Wax, Berry, Caerus and SM Energy is steady, with no disruptions or pivots
• 4:32
  overnight.
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  Bakken.
• 4:34
  Williston production holds in the one point one nine to one point two zero million
• 4:38
  barrels per day band, and gas capture is above ninety five percent.
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  Dakota Access is effectively full, with minimal spot capacity south.
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  Rail to coastal refiners costs ten to fifteen dollars a barrel,
• 4:49
  which keeps movements to contracted baseline volumes.
• 4:52
  Chord continues Williston development after its Marcellus non operated divestment,
• 4:57
  and Hess Midstream maintains guidance for at least five percent second half volume
• 5:00
  growth.
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  Powder River.
• 5:02
  Rig activity is steady from Anschutz, Continental, Devon, EOG and Peak,
• 5:07
  and gathering integration continues after Plains' five hundred eighty five million
• 5:11
  dollar Silver Creek deal.
• 5:13
  The more structural point: Kinder Morgan's eighty eight thousand barrel per day
• 5:16
  Double H line is converting to N G L service.
• 5:19
  That leaves local crude takeaway leaning harder on Belle Fourche and gathering into
• 5:23
  Guernsey.
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  Now, the section that matters.
• 5:26
  Guernsey.
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  Say it GERN zee.
• 5:28
  Light sweet is holding steady at about eighty five cents over Cushing,
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  and roughly a dollar fifty to two ten over Clearbrook.
• 5:36
  No change on Cushing from yesterday.
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  The story is the pipe, not the molecule.
• 5:41
  Pony Express, at roughly four hundred thirty thousand barrels per day,
• 5:45
  and Platte are both heavily prorated.
• 5:48
  Scheduled space continues to trade at a premium to crude in the tank.
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  Guernsey tanks are full of Bakken, Powder River and Canadian barrels,
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  all competing for southbound egress to capture that eleven fifty Brent W T I arb.
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  Space on the pipe is the scarce commercial asset.
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  So shippers have three choices.
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  One, take severe apportionment on Pony or Platte and realize the Gulf Coast export
• 6:13
  netback on the barrels that get through.
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  Two, divert east into Clearbrook at roughly a two dollar discount,
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  into Midwest refinery turnaround slack, which is the same slack weighing on W C S.
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  Or three, pay ten to fifteen dollars or more in crude by rail costs.
• 6:31
  At those numbers, rail stays the last resort, and apportioned pipe space is still
• 6:36
  the better deal.
• 6:38
  On open seasons, one clarification.
• 6:41
  The Tallgrass and Bridger binding open season finished in early twenty twenty five.
• 6:45
  Bridger's proposed five hundred fifty thousand barrel per day line from Canada to
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  Guernsey remains a multi year proposal with no near term operational impact.
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  That's the brief.
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  Back tomorrow.