Brent-WTI Spread Widens as Rockies Barrels Get Squeezed

Marcus Hayes

Saturday, October third. Here's what moved since Friday morning, and what it means for Rockies and Bakken barrels.

Marcus Hayes

Global first. Brent settled Friday at one hundred two dollars and twenty five cents, down six cents on the day and up about a tenth of a percent on the week. The catalyst was the G7 and the European Union agreeing to coordinate a release of one hundred million barrels through the I E A over four months. That's fifty million barrels of European diesel and fifty million of crude, with French President Macron describing the four month timeline. The pressure fell on W T I, not Brent, and that's what matters for us. W T I settled at ninety one eleven, down a dollar seventy six, after touching an intraday low of eighty eight oh six. It's down about one point six percent on the week. The Brent premium over W T I blew out to eleven dollars and fourteen cents. That's a strong pull on Gulf Coast waterborne exports, and it tells you where marginal barrels want to go.

Marcus Hayes

Geopolitics stayed noisy. Persian Gulf exports are back near prewar levels but erratic. UKMTO reported a crude tanker struck by an unidentified projectile off Oman, and the U.S. is sending a third carrier strike group. Desk reports also say Chinese refiners suspended refined fuel exports for October, Ukraine hit Russian refining in Samara and Volgograd, OPEC plus delayed a capacity review, and Barclays lifted its fourth quarter Brent forecast by twenty dollars to one fifteen. Those last items come from desk notes, and I haven't tied them to primary text, so weigh them accordingly.

Marcus Hayes

North America. Western Canadian Select at Hardisty widened to sixteen sixty five under W T I, according to CalRock brokerage data. That's about a dollar fifty wider on the week. The explanation is Midwest refinery turnarounds taking fewer heavy barrels, plus a strong front month W T I. Canadian rigs jumped eight to two hundred sixteen, per Baker Hughes. Enbridge Express is reported running full into Casper. Trans Mountain is running around sixty percent, but the four hundred twenty five thousand barrel per day figure in my notes doesn't reconcile with that, so treat it as soft. Pemex keeps trimming Maya exports to feed Dos Bocas. Nothing else material.

Marcus Hayes

United States. The latest scheduled E I A release is Wednesday's, for the week ending September twenty fifth. Commercial crude rose nine hundred twenty two thousand barrels to four hundred twenty seven point three two million. I don't have a consensus number, so I can't give you the surprise. The regional split is the useful part. The Midwest built one point zero four million to one hundred five point one one million, and the Gulf Coast built three point four two million to two hundred forty seven point five million. The Rockies drew eight hundred twenty three thousand barrels to twenty two point five million, which is about three hundred twenty three thousand below a year ago.

Marcus Hayes

Cushing is where my notes disagree with themselves. They cite tank bottoms near fourteen point six million barrels and also a range of twenty to twenty two million. I can't confirm the latest weekly Cushing figure, so I'll say only that it remains thin and keeps prompt barrels at a premium. Baker Hughes had the U.S. rig count down one to five hundred ninety eight, which is forty nine above a year ago. Enbridge's two point five five billion dollar Tallgrass crude deal, including seventy five percent of Pony Express, was reported by R B N on September fifteenth. It's not new, but it changes who you'll negotiate with.

Marcus Hayes

Uinta Basin. Nothing genuinely new in the last day, but the structure is worth restating. Yellow wax is commanding about a three dollar twenty premium at Gulf Coast refineries. Salt Lake refiners cap out around eighty thousand barrels per day of waxy crude, so every incremental barrel goes by rail or heated truck. Freight to the Gulf runs sixteen to eighteen dollars, which eats most of that premium. The Uinta Basin Railway cleared the Supreme Court on its environmental review, but my notes say it's still in Surface Transportation Board remand and Forest Service right of way review. Financing hasn't closed and construction hasn't started. For your Uinta terminal, rail loading is still the only commercial outlet. On operators, SM Energy is integrating its XCL Resources stake, and everyone else is holding a steady pace.

Marcus Hayes

Bakken. Production is steady around one point one nine to one point two million barrels per day. Nothing from the Director's Cut this cycle. My notes say gas capture is well above ninety five percent against a ninety five point eight requirement. Those can't both be true, so I'm not leaning on that line. Dakota Access is reported running near full, which leaves little pipeline room. Clearbrook is trading a dollar fifty to two ten under Guernsey. The rail question is whether that gap covers rail freight. My notes put the freight penalty at ten to twelve dollars in one place and thirteen to fifteen in another, so run your own numbers before Monday. Operators reported nothing new.

Marcus Hayes

Powder River. Steady Niobrara and Turner drilling from Anschutz, Continental, Devon, EOG and Peak. On takeaway, my notes say Plains is buying Silver Creek's six hundred mile gathering system for five hundred eighty five million dollars. I couldn't trace that to a primary source, so hold it loosely. They also say Kinder Morgan's Double H is converting to N G L service, with the original target the first quarter of this year. I can't confirm where that stands, and it matters, because it would pull a Dore to Guernsey crude artery out of service.

Marcus Hayes

Now Guernsey, GERN-zee, the section that matters most. Light sweet is holding at eighty five cents over Cushing, unchanged, which matches where we were in the last episode. Against Clearbrook the premium is about two ten, and it widened over the week as Midwest turnarounds left barrels stuck in the Midwest while egress south of Guernsey stayed tight. Storage there is full of Bakken, Canadian and Powder River crude, and the outlet is the constraint. Desk notes say Pony Express is heavily apportioned, with scheduled barrels trading at a premium to tank crude. I can't tie that to a tariff filing. Capacity is also muddled, since R B N cited roughly four hundred thirty thousand barrels per day in 2025 and my notes carry two hundred thirty. The Tallgrass and Bridger joint tariff open season dates to February 2025, so nothing new there. Bridger's proposed five hundred fifty thousand barrel per day line from the border to Guernsey is a plan, not capacity.

Marcus Hayes

So the netback picture is this. A shipper can take proration on Pony Express and Platte, dump barrels at a discount into Clearbrook, or pay the rail penalty. With a wider Brent premium pulling Gulf barrels out and Midwest refiners down, the Rockies are getting squeezed. Watch Monday's apportionment notices first. That's the brief.