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Middle East Tensions, Heavy Discounts, and Rockies Takeaway Bottlenecks · The Gathering Line

• 0:00
  Monday, October twelfth.
• 0:02
  Here's what moved since Friday morning, and what it means for Rockies barrels.
• 0:06
  Start with the screens.
• 0:07
  Brent was up sixty nine cents, seven tenths of a percent, at one hundred five
• 0:11
  dollars and forty one cents by nine twenty three G M T, per Reuters.
• 0:15
  That retraces an earlier dip, and it sits above Friday's settle of one hundred four
• 0:19
  seventy two.
• 0:21
  Sunday's brief said to watch the futures reopen.
• 0:24
  It opened soft on Russian diesel headlines, then the Saudi news pulled it back up.
• 0:28
  On Saturday, Houthi missiles and drones hit King Khalid International Airport in
• 0:32
  Riyadh.
• 0:33
  Reuters counts at least twelve dead and more than three hundred wounded,
• 0:37
  and a later Reuters report says thirteen.
• 0:40
  It's the deadliest attack on the kingdom in more than a decade.
• 0:43
  More attacks followed Sunday.
• 0:45
  Houthi spokesman Yahya Saree says the operations deep inside Saudi Arabia will
• 0:49
  continue, and he named oil facilities among the targets.
• 0:53
  BP has pulled out of the Riyadh energy conference.
• 0:56
  Add two tanker attacks reported by U K M T O, one drone strike near Sohar,
• 1:01
  Oman, and one vessel damaged transiting Hormuz.
• 1:04
  Iran also called the U.S.
• 1:05
  response to its seven day Hormuz reopening proposal insufficient.
• 1:10
  The offset is diesel.
• 1:11
  Trump said Friday that Russia will supply more than three hundred thousand metric
• 1:15
  tons to U.S.
• 1:16
  and global markets, and I.C.E.
• 1:18
  gasoil fell four point three percent to fourteen nineteen fifty a ton.
• 1:22
  PVM's Tamas Varga questions the immediate impact, since Russian refining capacity is
• 1:27
  badly reduced.
• 1:28
  Trump also announced a Russia Ukraine energy ceasefire on Sunday.
• 1:32
  Zelenskiy says he's waiting on details, and Moscow hasn't commented.
• 1:36
  So treat that one as unconfirmed.
• 1:38
  Two more global items.
• 1:40
  OPEC cut its 2026 demand growth forecast to four hundred thousand barrels per day,
• 1:45
  from five hundred eighty thousand in August, and says the deferred demand shows up
• 1:48
  in 2027.
• 1:50
  Goldman lifted its December Brent forecast to ninety dollars,
• 1:53
  citing a risk premium just over twenty dollars.
• 1:56
  North America.
• 1:58
  This is the number I'd flag.
• 1:59
  Western Canadian Select for November at Hardisty settled Friday at twenty five fifty
• 2:05
  five under W T I, per CalRock, against twenty twenty on Thursday.
• 2:09
  That's the widest heavy discount since 2023.
• 2:12
  The desk notes tie it to soft heavy fuel oil on the Gulf Coast and high ocean
• 2:17
  freight.
• 2:18
  Canadian export lines run near ninety three percent full, and Express into Casper is
• 2:23
  full at two hundred eighty thousand barrels per day.
• 2:26
  Trans Mountain is near sixty percent.
• 2:29
  Winter diluent ratios will tighten effective heavy capacity further.
• 2:33
  Canadian rigs rose six to two hundred twenty two.
• 2:36
  Nothing material from Mexico.
• 2:39
  United States.
• 2:40
  W T I was at ninety two forty two this morning, up fifty seven cents,
• 2:44
  after Friday's settle of ninety one eighty five.
• 2:47
  That leaves Brent about twelve ninety nine over, which is a wide pull toward Gulf
• 2:52
  Coast docks.
• 2:53
  Goldman still projects W T I averaging eighty one dollars in December and seventy
• 2:58
  three in 2027, because of transatlantic freight.
• 3:02
  No new E I A release since Friday, so here's Wednesday's baseline.
• 3:06
  Commercial crude drew three point two million barrels to four twenty four point one
• 3:10
  million, against a consensus build of one point seven.
• 3:13
  Cushing built four hundred forty thousand to twenty four point seven million,
• 3:17
  still one point eight four million under the five year average.
• 3:21
  PADD two built one point eight seven million on refinery turnarounds.
• 3:25
  PADD four drew a hundred forty four thousand to twenty two point three five million.
• 3:30
  National utilization averaged ninety two point seven percent.
• 3:34
  Baker Hughes Friday had the U.S.
• 3:36
  count up five to six hundred three, oil up six to four sixty two.
• 3:40
  Offshore, Isaias shut in roughly one point five million barrels per day,
• 3:45
  about seventy two percent of Gulf output.
• 3:47
  Shell, Chevron and BP are now redeploying crews.
• 3:51
  One piece of context from last Tuesday.
• 3:53
  Hess Midstream is buying Chevron's D J Basin gathering assets,
• 3:58
  including a twenty percent stake in Saddlehorn to Cushing, for two hundred million
• 4:02
  dollars cash.
• 4:04
  It also extends the Bakken agreements to 2045 at lower tariffs.
• 4:09
  Uinta Basin.
• 4:10
  Yellow wax is indicated roughly ten to fourteen dollars under Cushing.
• 4:14
  Gulf Coast refiners are bidding delivered waxy around three twenty over W T I,
• 4:18
  but heated rail runs sixteen to eighteen dollars a barrel.
• 4:22
  The desk math puts the spot rail netback at roughly twelve eighty to fourteen eighty
• 4:26
  under, no better than local sales, so spot rail stays out of the money and only term
• 4:31
  contracts move.
• 4:32
  The five Salt Lake refineries keep absorbing about eighty thousand barrels per day.
• 4:37
  On capacity, East Daley says Uinta rigs rose from eleven in April to fifteen by late
• 4:42
  August, and June rail loadings hit a hundred fifteen thousand barrels per day.
• 4:46
  Energy Transfer's Price River expansion is still slated for the fourth quarter,
• 4:49
  with Utah permits in final review.
• 4:52
  Wildcat's Helper terminal is growing from twenty thousand to a hundred thousand.
• 4:56
  The Uinta Basin Railway hasn't moved.
• 4:58
  The S T B remand is pending, Forest Service permits are open,
• 5:01
  financing is unfinalized, and nothing is under construction.
• 5:04
  Operators are in normal course.
• 5:07
  Bakken.
• 5:08
  Williston output holds around one point nineteen to one point two million barrels
• 5:11
  per day, with gas capture at ninety five point five percent.
• 5:15
  D A P L is fully booked with negligible spot space south.
• 5:18
  Kinder Morgan's Double H conversion to N G L service, now Hiland Express,
• 5:22
  removes an estimated sixty five to eighty eight thousand barrels per day of crude
• 5:25
  capacity toward Guernsey, and that crude is pushing onto D A P L and the Bridger and
• 5:29
  Belle Fourche systems.
• 5:31
  Coastal rail at ten to fifteen dollars a barrel can't beat pipe netbacks.
• 5:35
  Chevron drops from three Bakken rigs to two in December, and Hess Midstream sees
• 5:39
  Bakken throughput down about five percent in 2027 before it plateaus.
• 5:44
  Powder River.
• 5:45
  Anschutz, Continental, Devon, EOG and Peak are steady, with no new takeaway
• 5:49
  constraints reported.
• 5:50
  Plains is still integrating its five hundred eighty five million dollar Silver Creek
• 5:53
  acquisition into its Guernsey footprint.
• 5:56
  Now Guernsey, GERN zee.
• 6:00
  Indicatively, light sweet is holding about eighty five cents over Cushing.
• 6:04
  Those are desk indications, not a confirmed posted print.
• 6:09
  Clearbrook sits a dollar fifty to two ten under Guernsey, which is sixty five cents
• 6:13
  to a dollar twenty five under Cushing.
• 6:16
  Direction: steady.
• 6:17
  The story is outbound space.
• 6:20
  Pony Express carries about two hundred thirty thousand barrels per day out of
• 6:24
  Guernsey on a four hundred thirty thousand system, and Platte moves about one forty
• 6:29
  five thousand to Wood River and Patoka.
• 6:31
  Both are heavily apportioned.
• 6:33
  The thirty day binding open season that Tallgrass and Bridger launched August twenty
• 6:37
  first for Pony Express and Seahorse closed with no incremental capacity added.
• 6:42
  So where do barrels go?
• 6:44
  First choice is any space to Cushing, even after proration,
• 6:48
  because that's the path to the thirteen dollar Brent pull.
• 6:51
  Second is Clearbrook, a deeper discount into a PADD two that just built one point
• 6:55
  eight seven million barrels on turnarounds.
• 6:58
  Third is rail to the coast, and at ten to fifteen dollars that erases the arbitrage.
• 7:03
  Apportionment at Guernsey is the bottleneck for every Rockies and Williston barrel.
• 7:08
  That's the brief.
• 7:09
  Watch the Saudi headlines and the Pony nominations.