Crude Prices, OPEC+ and Middle East Risk
An update on crude markets, OPEC+ expectations, and the latest geopolitical risks, including fresh Middle East tensions that could hit reopening futures. Also covered are North American differentials, U.S. inventory and rig data, and market chatter around Enbridge’s reported Tallgrass deal.
Chapter 1
x
Marcus Hayes
Sunday, October fourth. Here's what moved ahead of Monday's nomination cycle.
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 seven percent over the past month, per Trading Economics. W T I settled at ninety one dollars and eleven cents, down a dollar seventy six, which leaves the Brent to W T I spread at eleven dollars and fourteen cents. That is a wide arb, and it keeps pulling waterborne barrels toward the Gulf Coast docks. The cushion under prices is the G seven and E U agreement to release up to one hundred million barrels of diesel and crude over four months. French President Macron announced it, and the split is roughly half diesel and half crude.
Marcus Hayes
The new risk is Saturday. Yemen's Houthis said they hit an Aramco facility in Riyadh with missiles and drones. Reuters carried a witness account of fire and smoke south of the capital. Aramco and Saudi authorities have not confirmed the extent of the damage, so treat any outage number you hear as unverified. Futures reopen tonight, which means that headline is not priced yet. It lands on top of tanker attacks near Hormuz and a third U S carrier group heading to the region.
Marcus Hayes
On OPEC plus, Reuters reports ministers agreed in principle to hold November targets steady ahead of today's formal meeting. My notes have the planned one hundred eighty thousand barrels per day monthly restart pegged for December, contingent on Iraq and Kazakhstan compensation. Watch the meeting language. That's where a surprise would come from.
Marcus Hayes
North America. Western Canadian Select at Hardisty is reported at sixteen dollars and sixty five cents under W T I, widening on Midwest heavy turnarounds. One caution: the outright quote I have, eighty dollars and fifty two cents from OilPrice, is two days old and doesn't reconcile with that discount. Ten fifty nine would be the gap off Friday's W T I. So call the direction wider, and treat the exact number as soft until you see a fresh assessment. Baker Hughes had Canada up eight rigs to two hundred sixteen. Express is running full into Casper at two hundred eighty thousand barrels per day, and Trans Mountain is steady near sixty percent of capacity. Nothing new on Mexico.
Marcus Hayes
United States. There was no scheduled E I A release in this window, so this is last Wednesday's report, week ending September twenty sixth. Commercial crude rose one point eight million barrels to four hundred sixteen point five million, about four percent under the five year average. Refinery utilization fell three hundred eight thousand barrels per day to ninety one point four percent as fall maintenance builds. Distillate gained six tenths of a million barrels and still sits six percent under the five year average. I don't have consensus in front of me, so I won't call a surprise. Cushing is described as thin, near operating bottoms, which keeps prompt barrels firm.
Marcus Hayes
Friday's Baker Hughes count: the U S total fell one to five hundred ninety eight, up forty nine on the year. Oil rigs rose four to four hundred eleven, gas rigs fell two to one hundred thirty two. Permian added one to two hundred forty one. On corporate news, the market is positioning around Enbridge's reported two point five five billion dollar purchase of Tallgrass crude assets, including the Pony Express stake. I haven't confirmed that against a primary source, so treat it as market talk.
Chapter 2
x
Marcus Hayes
Now your barrels.