Brent Jumps, but GERN-zee Faces a December Egress Squeeze

Marcus Hayes

Friday, October twenty third. December nominations close today, and the rig count lands at noon Central.

Marcus Hayes

Global first. Brent ran again overnight. IranWire has it touching one hundred fourteen dollars, a five month high. Fortune had it at one hundred sixteen dollars and three cents at seven fifteen Eastern, up two dollars and eighty two cents from Thursday morning. Those are two different quotes pointing the same direction, so lean on the direction. The reported trigger is Houthi strikes on Saudi energy facilities and an order to pull Aramco staff out of Dhahran. President Trump said Thursday that Iran is using fake news to push prices up before the midterms. That's a claim, not a supply fact. Kpler and Vortexa show Iranian seaborne exports at zero in September and October, and Hormuz traffic is back above where it was before the war.

Marcus Hayes

Here's the piece that touches your book. RBN has supertanker fixtures from the Gulf Coast to China above eighty million dollars, and Goldman puts average crude freight near twenty dollars a barrel, against three a year ago. That wedge is why inland light sweet isn't capturing the waterborne Brent print. OPEC+ quotas are unchanged heading into the November first ministerial. JODI data via OilPrice has Saudi output at six point two four million barrels per day in August, with exports of four point four five million held up by drawing down domestic stocks, not by pumping more. The U.S. strategic reserve sits at two hundred eighty two point seven million barrels, lowest since nineteen eighty two.

Marcus Hayes

North America. W C S for November at Hardisty is steady at twenty five dollars and fifty cents under W T I. Export trunklines out of Western Canada run near ninety three percent. T M X is stuck near sixty percent, about four hundred twenty five thousand barrels per day, because Pacific freight keeps the Asian arbitrage shut. That pushes Canadian barrels toward the U.S. interior. Enbridge's Express is at one hundred percent, two hundred eighty thousand barrels per day, into Casper and Gern zee. Mexico, nothing material.

Marcus Hayes

United States. W T I broke above one hundred dollars this morning, after trading near ninety nine fifty to one hundred Thursday. The cash to futures spread is noisy with the December roll, so treat it loosely. Picking up from Wednesday's E I A report: commercial crude fell three point zero six one million barrels to four hundred twelve point five one seven million, against a consensus draw of one point three. But the Gulf Coast, PADD three, was the entire draw, down five point oh four one million on storm shut ins. Inland built. PADD four, the Rockies, added seven hundred eighty six thousand to twenty three point four nine six million. Cushing added one million to twenty seven point six, a fourth straight build. Production fell four hundred ten thousand to thirteen point two seven million, and runs slipped to ninety three point four percent. Baker Hughes comes at noon. The baseline from October sixteenth is six hundred three total rigs, oil down three to four fifty nine, gas one thirty three. Corporate: Devon is selling its Eagle Ford position to Crescent Energy for four point two two billion in cash. Antitrust reviews continue on Enbridge's two point five five billion dollar Tallgrass crude deal, which includes seventy five percent of Pony Express, and on Hess Midstream's roughly two hundred million dollar purchase of Chevron's D J Basin gathering plus a twenty percent Saddlehorn stake.

Marcus Hayes

Uinta Basin. Yellow wax wellhead postings hold ten to fourteen dollars under Cushing. Delivered Gulf Coast wax trades at W T I plus three twenty. Heated railcar freight is sixteen to eighteen dollars, which gives a Gulf Coast netback of eighty five fifteen to eighty seven fifteen, twelve eighty to fourteen eighty under Cushing. Spot rail is underwater against local refinery postings. Salt Lake's five refiners are taking about eighty thousand barrels per day of waxy crude, which is their ceiling before fouling. Rail loadings average one hundred fifteen thousand, entirely M V C anchored, and spot racks are idle. Wildcat's Helper terminal keeps expanding toward one hundred thousand. Energy Transfer's Price River terminal is in Utah permitting review, with a decision targeted for the fourth quarter. The Uinta Basin Railway has laid no track. The D.C. Circuit formally sent the case back to the Surface Transportation Board, and the Forest Service right of way stays on hold pending the Board's updated order. Operators are level.

Marcus Hayes

Bakken. Director's Cut data holds production near one point one five three million barrels per day, thirty three rigs, ninety six percent gas capture, about one hundred thirty million cubic feet per day flared. Dakota Access is full at an effective seven hundred fifty thousand. Walk up tariffs run nine seventy five a barrel against five sixteen to seven fifty six committed. Double H's N G L conversion permanently removes sixty five to eighty eight thousand barrels per day of crude capacity, so reliance concentrates on D A P L and Bridger. All in rail to the coasts is ten to fifteen dollars before car lease and rack tariffs, and spot crude by rail is commercially shut. Chevron trims Williston from three rigs to two by December for longer laterals, and Hess Midstream sees twenty twenty seven volumes down about five percent before flattening.

Marcus Hayes

Powder River. Anschutz, Continental, Devon, EOG, and Peak hold their schedules, and gathering has room. The squeeze is at the receipt manifolds feeding the Gern zee headers. Plains is still integrating the Silver Creek system.

Marcus Hayes

Now Gern zee, the one that matters today. Desk indications are soft, so weigh them that way: Gern zee sweet at eighty five cents over Cushing, roughly one hundred dollars and eighty five cents outright, flat over the last twenty four hours. Same level as Thursday's indication. Clearbrook sits one fifty to two ten under Gern zee, meaning sixty five cents to a dollar twenty five under Cushing.

Marcus Hayes

Look at the balance. Receipts are heavy. Express puts two hundred eighty thousand barrels per day of Canadian crude into Casper and Gern zee, and Bridger and Belle Fourche feed in more than three hundred thousand of Bakken. Egress is the problem. The desk has Pony Express running roughly two hundred thirty thousand barrels per day against a four hundred thirty thousand nameplate, blamed on downstream allocation and refinery constraints. I can't confirm that number, and East Daley had Pony above its nameplate in the third quarter of last year, so verify it with your own scheduler. Platte, one hundred forty five thousand eastbound to Wood River and Patoka, is under heavy proration. Saddlehorn and Grand Mesa are full of D J barrels headed for Cushing.

Marcus Hayes

The long game stays in view. Bridger has filed in Montana for a five hundred fifty thousand barrel per day, thirty six inch line, six hundred forty five miles from Phillips County to Gern zee, targeting a July twenty twenty seven start. East Daley's read, from March, is that the hub can't absorb that without downstream capacity, most likely looping Pony. The Bridger and Tallgrass open season is about securing that commercial backing.

Marcus Hayes

Now today's cutoff. With secondary allocation cuts, uncommitted shippers may not get space for December. The choice is simple: put barrels in local tanks, or pay M V C deficiency charges. Three things before close. First, audit your nomination confirmations before you take any spot receipts. Don't accept a barrel you can't schedule out. Second, enforce deficiency billing on shippers who miss commitments, because that's what protects your throughput economics. Third, verify batch segregation at the headers. Heavy Canadian crude arriving by Express into Casper and Gern zee raises real contamination risk, A P I gravity and sulfur, for sweet batches. One off spec rejection at a refinery costs more than the whole differential move this week.

Marcus Hayes

That's the brief. Check the rig count at noon, and confirm your nominations before the bell.