Russia Policy Reverses the Screen; GERN-zee Barrels Push North

Marcus Hayes

Monday, October nineteenth. Here's what moved since Friday morning.

Marcus Hayes

First, a loose end from Sunday. Baker Hughes has the October sixteenth rig count posted: six hundred and three total U S rigs, unchanged on the week and fifty five above a year ago. Oil rigs at four sixty two, gas rigs at one thirty two. Canada dropped five to two seventeen. So the number I flagged as unconfirmed is now confirmed, and it's flat.

Marcus Hayes

Now the screen. Friday, Brent settled at a hundred and nine dollars and eighty six cents, the highest close since May nineteenth. W T I settled at a hundred and one forty one, its first close above a hundred since September seventeenth, and up ten point four one percent on the week. Sunday I said triple digit W T I was a headline screen, not a physical bid. Monday backed that up. Early Asian trade, Brent was down one point four percent at a hundred and eight thirty five, per Investing dot com. Vantage has W T I at ninety eight sixty one, back under a hundred.

Marcus Hayes

The driver was Washington. Late Friday, the President signed an order waiving new Russia sanctions and tariffs on major buyers of Russian oil and gas, the ones due under the Graham Act. Secretary of State Rubio said the administration wants time to assess the economic impact. Zelenskyy called it wrong. Markets priced the supply that could come back ahead of the risk that might not.

Marcus Hayes

On risk: Saturday, Iran's Revolutionary Guards Navy said two tankers hit mines in the Strait of Hormuz, per IRNA as carried by Reuters. No independent confirmation. Treat it as a claim. Friday, a ballistic missile aimed at Yanbu was intercepted, with early reports of no damage. Yanbu matters because it exports Saudi crude without crossing Hormuz. Ukraine also knocked a primary crude unit offline at Russia's Ryazan refinery. On the supply side, the I E A has agreed to release more than twenty million barrels of fuel, and OPEC plus holds November output, with a ministerial on November first.

Marcus Hayes

One caution on the paper. Dated Brent is still assessed near a hundred and thirty four, and Gulf tanker freight is around a million three hundred thousand dollars a day, roughly thirty three dollars a barrel on a Persian Gulf voyage, per Poten data reported by Gulf News and OilPrice. Waterborne is carrying a toll that inland crude doesn't.

Marcus Hayes

North America. Western Canadian Select for November closed Friday at twenty five fifty to twenty five fifty five under W T I at Hardisty. Trans Mountain is capped near sixty percent, about four hundred and twenty five thousand barrels per day, because Westridge freight keeps trans Pacific economics tight. Canadian export pipes run near ninety three percent full. What matters to us: Enbridge's Express is flowing at a hundred percent, two hundred and eighty thousand barrels per day into Casper, putting discounted heavy barrels straight into the Rockies corridor. Mexico, nothing material.

Marcus Hayes

United States. No new E I A print since Friday, but the last one sets up Wednesday's. For the week ending October ninth, commercial crude fell eight point five five seven million barrels to four fifteen point five seven seven million, against a Reuters consensus draw of just two hundred and eighty eight thousand. All of it was Gulf Coast, down nine point two three nine million, with roughly five hundred thousand barrels per day of Hurricane Isaias shut ins and export loadings. The Rockies, PADD four, actually built three hundred and fifty eight thousand barrels to twenty two point seven one zero million. PADD two added twenty three thousand to a hundred and seven million, with refinery utilization at ninety two point seven percent. Cushing sits at twenty four point seven million. So the national draw is a Gulf story, not a Rockies one.

Marcus Hayes

Two more. The Department of Energy is seeking proposals to exchange up to seventeen million barrels of S P R crude for November and December delivery. Energy Aspects puts the reserve near two hundred and eighty three million barrels, the lowest since October of nineteen eighty two. That barrel lands on the coast and takes pull off inland rail. And on deals, Enbridge's two point five five billion dollar Tallgrass crude purchase, which includes Pony Express, and Hess Midstream's two hundred million dollar buy of Chevron's D J gathering system, with its twenty percent Saddlehorn stake, are both still pending.

Marcus Hayes

Uinta Basin. Yellow wax wellhead postings are steady at ten to fourteen dollars under Cushing. Delivered Gulf Coast is indicated at W T I plus three twenty, call it a hundred and one eighty on the sub hundred screen. Coiled, insulated railcar freight to the Gulf runs sixteen to eighteen dollars a barrel, which leaves a basin netback of eighty three eighty to eighty five eighty, twelve eighty to fourteen eighty under Cushing. That doesn't clear postings, so spot rail stays shut. Loadings are about a hundred and fifteen thousand barrels per day, all under legacy minimum volume commitments.

Marcus Hayes

The five Salt Lake refiners are still capped at eighty thousand barrels per day of waxy. Energy Transfer's Price River terminal is waiting on final Utah air quality permits, targeting late fourth quarter. Wildcat's Helper terminal keeps expanding toward a hundred thousand. The Uinta Basin Railway has laid zero track, still tied up in the S T B remand, Forest Service right of way reviews, and Seven County bond structuring. Operators, Veren, Ovintiv, Scout, XCL, Uinta Wax, Berry, Caerus, SM, are holding steady completions and not putting new barrels on unhedged spot rail.

Marcus Hayes

Bakken. Latest Director's Cut: one point one five three million barrels per day, thirty three rigs, gas capture at ninety six percent, flaring near a hundred and thirty million cubic feet per day. DAPL is full at seven hundred and fifty thousand barrels per day, committed tariffs five sixteen to seven fifty six, walk up at nine seventy five. Rail to the East Coast or Pacific Northwest costs ten to fifteen dollars all in. It was out of the money even at Friday's eight forty five Brent W T I spread, and Monday's wider spread, near eleven dollars on CFD indications, gives no relief. Rail is commitments only.

Marcus Hayes

Chevron goes from three Williston rigs to two by December, focusing on three mile laterals. Hess Midstream models gathering throughput down five percent in twenty twenty seven before flattening. Chord, Continental, Devon with Grayson Mill, and Conoco hold flat schedules. And the Double H conversion, now Hiland Express, took sixty five thousand barrels per day of crude off that southern path. Plainview's October fifteenth analysis expects it to split across DAPL, Enbridge's Bakken system, and Bridger, which tightens aggregation locally.

Marcus Hayes

Powder River. Anschutz, Continental, Devon, EOG, and Peak are drilling steadily. Gathering has room. The constraint is downstream at GERN zee. Plains is still integrating its five hundred and eighty five million dollar Silver Creek gathering purchase.

Marcus Hayes

Now GERN zee, the one that matters. Sweet is steady at about eighty five cents over Cushing, near ninety nine forty six outright. Clearbrook is a dollar fifty to two ten under GERN zee, sixty five cents to a dollar twenty five under Cushing. That eighty five cents is misleading for uncommitted barrels, because the exits are apportioned. Pony Express is moving roughly two hundred and thirty thousand barrels per day against four hundred and thirty thousand of system capacity, under severe apportionment. The Tallgrass and Bridger open season offered incentive commitments, but no new steel. Platte, a hundred and forty five thousand, is heavily prorated toward Wood River and Patoka. Saddlehorn and Grand Mesa are saturated with D J crude headed to Cushing.

Marcus Hayes

Inflows stay high: two hundred and eighty thousand from Express, and over three hundred thousand of Bakken barrels south on Bridger and Belle Fourche. With Midcontinent turnarounds backing up storage, surplus is pushing north toward Clearbrook, not south. Producers will shop spot barrels off Friday's hundred dollar screen. Don't take them without verified downstream delivery tickets. Enforce your minimum volume commitments, and watch tankage and manifold blending so you don't contaminate a line.

Marcus Hayes

That's the brief. Wednesday's E I A is next.