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Saudi Aramco Strikes, Export Arbs, and the Guernsey Bottleneck · The Gathering Line

• 0:00
  Wednesday, October fourteenth.
• 0:02
  Here's what moved, and what it does to Rockies barrels.
• 0:06
  Global first.
• 0:07
  Following up on Tuesday's brief, the Houthi campaign escalated overnight.
• 0:12
  Reuters reported loud booms near Saudi Aramco's headquarters in Dhahran Tuesday
• 0:16
  night, with six sources describing a fire and an evacuation order.
• 0:21
  Aramco told employees to work from home Wednesday.
• 0:24
  The Saudi Energy Ministry, per the Wall Street Journal, confirmed an administrative
• 0:28
  building was targeted, with a limited fire and no casualties reported.
• 0:33
  People familiar told the Journal the missile hit an office building and damaged a
• 0:36
  number of floors.
• 0:38
  Civil defense sirens and a boom followed in Riyadh.
• 0:42
  This comes right after the weekend airport strike, and Reuters has the Houthis
• 0:45
  vowing more attacks on Saudi airports and oil facilities.
• 0:49
  I have no confirmed report of lost production or exports from this strike.
• 0:54
  It hit corporate offices, but it's a signal about reach.
• 0:58
  On price, Brent settled Tuesday near one hundred five dollars and sixty cents,
• 1:02
  slipping about one percent at points as the market absorbed temporary U.S.
• 1:06
  sanctions relief on roughly three hundred thousand metric tons of Russian diesel.
• 1:11
  Then it rebounded early Wednesday toward one hundred six fifty to one hundred seven.
• 1:15
  Morgan Stanley now has Dated Brent at one hundred five dollars for the fourth
• 1:19
  quarter and one hundred for the first quarter of 2027, and it's citing dirty tanker
• 1:23
  freight and transit risk.
• 1:26
  The OPEC Monthly Oil Market Report did publish Tuesday, the one we were waiting on.
• 1:31
  OPEC cut 2026 demand growth to two hundred thousand barrels per day,
• 1:35
  down from four hundred thousand in September.
• 1:37
  That's OECD easing by two hundred thousand, partly offset by four hundred thousand
• 1:42
  of non-OECD growth.
• 1:44
  It raised 2027 demand growth to two point six million barrels per day,
• 1:48
  from two point four, on the expectation of commercial inventory rebuilding after the
• 1:52
  conflict.
• 1:53
  OPEC plus output rose nine hundred thousand barrels per day in September to thirty
• 1:59
  nine point oh seven million, led by Saudi Arabia.
• 2:04
  So the demand cut is a headline, but the physical story is still supply risk.
• 2:09
  North America.
• 2:10
  Western Canadian Select for November at Hardisty is around twenty five fifty five
• 2:14
  under W T I, near multi year wides.
• 2:18
  Soft Gulf Coast heavy refining margins, high tanker freight,
• 2:21
  and winter diluent blending, which adds about thirty percent to batch volume,
• 2:25
  are all weighing.
• 2:26
  Trunklines are around ninety three percent utilized.
• 2:29
  Express to Casper is running full at two hundred eighty thousand barrels per day,
• 2:34
  and Trans Mountain is holding near sixty percent, about four hundred twenty five
• 2:37
  thousand barrels per day to Westridge.
• 2:40
  Mexico, nothing material.
• 2:42
  United States.
• 2:44
  Important desk note: the E I A Weekly Petroleum Status Report does not release
• 2:48
  today.
• 2:49
  Because of Monday's federal holiday, it comes Thursday, October fifteenth,
• 2:53
  at noon Eastern.
• 2:55
  So the baseline is still last week's print: commercial crude drew three point one
• 2:59
  eight six million barrels to four hundred twenty four point one million,
• 3:02
  against a consensus build of one point seven two two million.
• 3:06
  Cushing built four hundred forty four thousand barrels to twenty four point seven
• 3:10
  million.
• 3:11
  PADD two built one point eight seven two million to about one hundred seven million
• 3:15
  on seasonal maintenance.
• 3:17
  PADD four, the Rockies, drew one hundred forty four thousand barrels to twenty two
• 3:20
  point three five million.
• 3:22
  Refinery runs were ninety two point seven percent of capacity.
• 3:26
  I don't have a published consensus for Thursday, so I won't give you one.
• 3:30
  Hurricane Isaias shut in an estimated five hundred thousand to five hundred twelve
• 3:34
  thousand barrels per day of Gulf output, roughly a quarter of offshore supply,
• 3:38
  and that shows up in coming prints.
• 3:40
  W T I settled Tuesday near ninety two eighty and ticked toward ninety four to ninety
• 3:44
  four eighty this morning.
• 3:46
  The Brent to W T I spread is twelve fifty to thirteen twenty five,
• 3:49
  and that keeps the pull toward the Gulf Coast strong.
• 3:52
  On deals, the desk is digesting Enbridge's two point five five billion dollar
• 3:57
  Tallgrass crude logistics buyout, and Hess Midstream's two hundred million dollar
• 4:02
  purchase of Chevron's D J Basin gathering, which includes a twenty percent stake in
• 4:06
  Saddlehorn.
• 4:08
  Treat both as headline level until we see terms.
• 4:11
  Uinta Basin.
• 4:13
  Yellow wax is indicated at ten to fourteen dollars under Cushing at the wellhead.
• 4:17
  Gulf Coast delivered waxy bids sit around three twenty over W T I,
• 4:21
  so roughly ninety six to ninety seven dollars.
• 4:24
  Heated insulated railcars to the Gulf run sixteen to eighteen dollars,
• 4:28
  which puts the netback at seventy eight to eighty one dollars,
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  or twelve to fourteen eighty under Cushing.
• 4:34
  That's equal to or worse than local posted prices, so spot rail stays shut,
• 4:40
  same as Tuesday.
• 4:41
  Only minimum volume commitment barrels are moving.
• 4:44
  Salt Lake City's five refiners are at their waxy ceiling of about eighty thousand
• 4:48
  barrels per day, and basin rail loadings hold near one hundred fifteen thousand.
• 4:52
  Energy Transfer's Price River terminal is still slated for a fourth quarter start,
• 4:56
  pending Utah air permitting.
• 4:58
  Wildcat is expanding Helper in phases from twenty thousand toward one hundred
• 5:02
  thousand.
• 5:04
  The Uinta Basin Railway is stalled, with no physical construction.
• 5:07
  It's waiting on the D C Circuit remand on the Surface Transportation Board,
• 5:11
  Forest Service right of way reissuance, and Seven County bond financing.
• 5:15
  Operators, including Crescent Point Veren, Ovintiv, Scout, XCL,
• 5:20
  and SM, report planned completions and no disruptions.
• 5:24
  Bakken.
• 5:25
  North Dakota's latest Director's Cut has state crude at one point one five three
• 5:29
  million barrels per day with thirty three rigs.
• 5:32
  Gas capture is around ninety six percent, with about one hundred thirty million
• 5:35
  cubic feet per day flared.
• 5:37
  Nothing new there.
• 5:38
  Dakota Access is effectively full at seven hundred fifty thousand barrels per day,
• 5:42
  with negligible uncommitted space.
• 5:45
  Committed tariffs run five sixteen to seven fifty six, uncommitted nine seventy
• 5:49
  five.
• 5:50
  Rail to the Pacific Northwest or East Coast costs ten to fifteen dollars all in,
• 5:55
  so even with a twelve fifty Brent premium, rail doesn't beat uncommitted pipe.
• 5:59
  Spot crude by rail stays subdued.
• 6:01
  Chevron is cutting Williston rigs from three to two by December,
• 6:05
  and Hess Midstream sees Bakken throughput down about five percent in 2027 before
• 6:11
  flattening.
• 6:12
  Powder River.
• 6:13
  Anschutz, Continental, Devon, EOG, and Peak are drilling and completing at a steady
• 6:19
  pace.
• 6:20
  Gathering takeaway is adequate, and the constraint shows up downstream at Guernsey.
• 6:25
  Plains continues integrating its five hundred eighty five million dollar Silver
• 6:29
  Creek gathering acquisition.
• 6:31
  Now GERN-zee, the section that matters.
• 6:34
  Guernsey light sweet is indicated steady at eighty five cents over Cushing.
• 6:39
  Clearbrook is assessed one fifty to two ten under Guernsey,
• 6:42
  so sixty five cents to a dollar twenty five under Cushing.
• 6:46
  That's the screen.
• 6:47
  The physical picture is tighter than the screen, so don't trust that premium as a
• 6:51
  netback.
• 6:52
  Pony Express, four hundred thirty thousand barrels per day of system capacity and
• 6:56
  moving about two hundred thirty thousand out of GERN-zee, remains heavily
• 7:00
  apportioned.
• 7:01
  The Tallgrass and Bridger binding open season did not add physical pipe.
• 7:05
  Platte, roughly one hundred forty five thousand barrels per day toward Wood River
• 7:09
  and Patoka, is under severe proration.
• 7:12
  Saddlehorn and Grand Mesa are near full absorbing D J Basin barrels into Cushing.
• 7:18
  Add Double H, where Kinder Morgan's conversion to N G L service has removed sixty
• 7:22
  five to eighty eight thousand barrels per day of crude egress toward GERN-zee.
• 7:26
  That pushes volume onto Bridger, Belle Fourche, and Enbridge's North Dakota line to
• 7:30
  Clearbrook, which is running above ninety percent full.
• 7:33
  So here's the squeeze.
• 7:34
  Twelve fifty to thirteen twenty five on Brent to W T I says the Gulf Coast is where
• 7:39
  every inland barrel wants to go.
• 7:41
  But Cushing is the only pipeline gateway south, and GERN-zee is the door to it.
• 7:45
  A barrel apportioned off Pony or Platte has two exits.
• 7:49
  One is north and east to Clearbrook, into a Midwest market that just built crude on
• 7:53
  refinery turnarounds.
• 7:54
  The other is rail at ten to fifteen dollars, which gives away the spread.
• 7:59
  Apportionment, not the differential, is capping Rockies and Bakken netbacks.
• 8:04
  Watch the E I A at noon Eastern tomorrow, and Dhahran headlines before that.
• 8:08
  That's the brief.