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Freight Shock, Tight Takeaway: Rockies and Bakken Crude · The Gathering Line

• 0:00
  Tuesday, October twentieth.
• 0:02
  Here's what moved, and what it means for your barrels.
• 0:05
  Global first.
• 0:06
  Brent settled down thirty one cents, three tenths of a percent,
• 0:10
  at one hundred nine dollars and fifty five cents on Monday.
• 0:13
  That's consolidation after Friday's five month high of one hundred nine dollars and
• 0:17
  eighty six cents.
• 0:19
  The physical market is a different animal.
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  North Sea Dated is assessed near one hundred thirty four dollars,
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  a huge cash over paper premium, and the driver is freight.
• 0:28
  Persian Gulf dirty tanker rates are hovering near one point three million dollars a
• 0:32
  day, roughly thirty three dollars a barrel.
• 0:35
  That's a shipping story more than a producer price signal.
• 0:38
  On supply, Kpler says Gulf crude flows averaged about eight and a half million
• 0:43
  barrels per day over the last seven days, down from more than twenty million the
• 0:47
  week before, after at least ten commercial vessel incidents.
• 0:51
  Iran's Revolutionary Guard says a tanker caught fire and exploded Sunday after
• 0:56
  striking a naval mine in the southern Strait of Hormuz.
• 0:59
  On Monday the Houthis claimed drone and missile strikes on Aramco's Yanbu facility,
• 1:04
  the Shaybah oilfield, and airports in Riyadh and Abha.
• 1:08
  Saudi authorities haven't confirmed damage, so treat those as claims.
• 1:13
  Yanbu matters because it's the Red Sea bypass terminal.
• 1:16
  A strike in Shabwa province in Yemen killed up to fifty three.
• 1:20
  On Russia, President Trump's Friday executive order waived Graham Act sanctions and
• 1:25
  tariffs.
• 1:26
  Secretary of State Rubio lands in India today and says a trade deal is very close.
• 1:31
  Under the arrangement with Moscow, Russian diesel exports start near two point three
• 1:35
  million barrels this month and scale toward seven point six million barrels monthly.
• 1:40
  Rubio said the administration will take up to sixty days to assess the impact.
• 1:45
  That's diesel, not crude, and it does nothing for Hormuz.
• 1:49
  On the institutions, OPEC plus baselines stay frozen through November ahead of the
• 1:53
  November first ministerial.
• 1:55
  IEA members confirmed a release of more than twenty million barrels of fuel.
• 1:59
  And the EIA's Short Term Energy Outlook has fourth quarter Brent averaging one
• 2:03
  hundred five dollars, with Middle East shut ins at four and a half million barrels
• 2:07
  per day.
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  North America.
• 2:09
  November W C S at Hardisty holds at twenty five dollars and fifty cents to twenty
• 2:13
  five fifty five under W T I.
• 2:16
  Canadian export pipes are running near ninety three percent utilization.
• 2:20
  Trans Mountain is capped near sixty percent, about four hundred twenty five thousand
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  barrels per day, because high Pacific freight keeps the trans Pacific arbitrage out
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  of Westridge uneconomic.
• 2:31
  The Rockies angle is Enbridge's Express, running full at two hundred eighty thousand
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  barrels per day into Casper.
• 2:37
  That's discounted Canadian heavy landing in your corridor every day.
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  Mexico, nothing material.
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  United States.
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  W T I gained two dollars and twenty five cents, two point two percent,
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  to settle at one hundred three dollars and sixty six cents,
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  the highest settlement since September fifteenth.
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  Volume was thin ahead of front month expiry today.
• 2:58
  As I said Monday, that's a screen headline, not a physical bid.
• 3:03
  The number for your rail desk is the Brent W T I spread.
• 3:06
  It compressed from eight forty five Friday to five eighty nine at Monday's close.
• 3:11
  No new EIA report since Friday.
• 3:14
  The Wednesday release is tomorrow.
• 3:16
  The last print, week ending October ninth, showed a commercial crude draw of eight
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  point five five seven million barrels to four hundred fifteen point five seven seven
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  million, against a consensus draw of just two hundred eighty eight thousand.
• 3:29
  All of it was PADD three.
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  The Gulf Coast fell nine point two three nine million barrels on roughly five
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  hundred thousand barrels per day of Hurricane Isaias shut ins plus export pull.
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  PADD four, the Rockies, built three hundred fifty eight thousand to twenty two point
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  seven one oh million.
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  PADD two rose twenty three thousand to one hundred seven point zero zero four
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  million, with refinery utilization at ninety two point seven percent amid autumn
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  turnarounds.
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  Cushing sits at twenty four point seven million.
• 3:59
  Baker Hughes had six hundred three rigs, four hundred sixty two oil and one hundred
• 4:03
  thirty two gas, flat on the week and up fifty five on the year.
• 4:08
  Canada fell five to two hundred seventeen.
• 4:11
  The Energy Department has a request for proposals out for up to seventeen million
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  barrels of S P R exchange crude for November and December.
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  Energy Aspects puts S P R inventory near two hundred eighty three million barrels,
• 4:23
  the lowest since October of nineteen eighty two.
• 4:26
  On deals, Enbridge's two point five five billion dollar purchase of Tallgrass crude
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  assets, which include Pony Express, and Hess Midstream's two hundred million dollar
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  purchase of Chevron's DJ Basin gathering system, with a twenty percent Saddlehorn
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  stake, both remain pending.
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  Uinta Basin.
• 4:42
  Yellow wax wellhead postings are steady at ten to fourteen dollars under Cushing.
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  Delivered Gulf Coast yellow wax is indicated at W T I plus three dollars and twenty
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  cents, about one hundred six eighty six outright.
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  Insulated railcar freight to the Gulf runs sixteen to eighteen dollars a barrel.
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  That puts the basin netback at eighty eight eighty six to ninety eighty six,
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  or twelve eighty to fourteen eighty under Cushing.
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  Salt Lake City postings match or beat that, so spot rail stays shut.
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  The five Salt Lake refineries are at their waxy cap of about eighty thousand barrels
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  per day.
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  Rail loadings are flat near one hundred fifteen thousand, held up by legacy minimum
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  volume commitments.
• 5:24
  Energy Transfer's Price River terminal still awaits final Utah air permits,
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  with a late fourth quarter target.
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  Wildcat's Helper terminal keeps expanding toward one hundred thousand.
• 5:34
  The Uinta Basin Railway has laid zero track, stuck in the Surface Transportation
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  Board remand, Forest Service reviews, and bond structuring.
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  Veren, Ovintiv, Scout, XCL, Uinta Wax, Berry, Caerus, and
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  SM Energy are all running steady programs.
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  Bakken.
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  The Director's Cut holds state output at one point one five three million barrels
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  per day, thirty three rigs, ninety six percent gas capture,
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  and flaring around one hundred thirty million cubic feet a day.
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  D A P L is full at seven hundred fifty thousand barrels per day,
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  with committed tariffs of five sixteen to seven fifty six and a walk up rate of nine
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  seventy five.
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  Rail to the East Coast or Pacific Northwest runs ten to fifteen dollars all in.
• 6:21
  With the Brent W T I spread at five eighty nine, spot rail is closed and crude by
• 6:26
  rail is held to contract volumes.
• 6:29
  The Double H conversion to N G L service took sixty five to eighty eight thousand
• 6:33
  barrels per day of southbound crude egress off the table, pushing volume onto D A P
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  L, Enbridge Bakken, and Bridger.
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  Chevron is trimming Williston rigs from three to two by December to focus on three
• 6:45
  mile laterals.
• 6:46
  Hess Midstream sees twenty twenty seven gathering throughput down five percent
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  before flattening.
• 6:52
  Chord, Continental, Devon with Grayson Mill, and ConocoPhillips are steady.
• 6:57
  Powder River.
• 6:58
  Anschutz, Continental, Devon, EOG, and Peak keep steady drilling and completions.
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  Gathering capacity is open.
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  The bottleneck is downstream takeaway at Guernsey.
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  Plains continues integrating its five hundred eighty five million dollar Silver
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  Creek gathering asset.
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  Now the section that matters most.
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  Guernsey, GERN zee, Sweet is steady at about eighty five cents over Cushing,
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  roughly one hundred four fifty one outright.
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  Clearbrook trades one fifty to two ten under Guernsey, sixty five cents to a dollar
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  twenty five under Cushing.
• 7:35
  No movement to report.
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  But that premium is a headline for uncommitted barrels.
• 7:40
  They can't capture it.
• 7:41
  Pony Express is moving about two hundred thirty thousand barrels per day against
• 7:46
  four hundred thirty thousand of capacity, under severe apportionment.
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  The Tallgrass and Bridger open season offered incentive tariffs but no incremental
• 7:55
  pipeline capacity.
• 7:57
  Platte, at one hundred forty five thousand, is heavily prorated toward Wood River
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  and Patoka.
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  Saddlehorn and Grand Mesa are saturated with DJ Basin crude bound for Cushing.
• 8:08
  Meanwhile the hub takes in two hundred eighty thousand from Express at Casper,
• 8:12
  plus more than three hundred thousand of Bakken crude flowing south on Bridger and
• 8:16
  Belle Fourche.
• 8:17
  With PADD two turnarounds backing up storage, the surplus goes north to Clearbrook
• 8:22
  at a discount instead of clearing south.
• 8:24
  The commercial read.
• 8:26
  W T I above one hundred three on expiry will tempt producers to push spot barrels at
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  your racks.
• 8:32
  Verify firm downstream tickets before you receive anything.
• 8:36
  Enforce deficiency billings on minimum volume commitments.
• 8:39
  And police manifold blending, so incoming Canadian heavy doesn't contaminate a
• 8:44
  pipeline batch.
• 8:45
  That's the brief.
• 8:46
  Talk tomorrow, after the EIA.