The Oil Drum

Robert, Gail et al, thanks for this report. WTF does it all mean? For the benefit of all Toders here's email correspondence from behind the veil:

Nate:

Both the DOE and API have released their respective oil and product inventory reports. A comparison of the two is below:

DOE: Actuals
Crude oil: Up 4.3 million barrels
Motor gas: Up 2.2 million barrels
Distillates: Up 1.2 million barrels
Complex Up 7.6 million barrels*
* Total does not add due to rounding

API: Actuals
Crude oil: Up 2.4 million barrels
Motor gas: Up 1.6 million barrels
Distillates: Down 3.3 million barrels
Complex: Up 0.7 million barrels

Below is the Bloomberg survey of analyst’s expectations for tomorrows DOE and API oil and product inventory reports:

Crude oil: Up 1.3 million barrels
Motor gas: Up 2.3 million barrels
Distillates: Up 1.6 million barrels
Complex: Up 5.1 million barrels*
* Total does not add due to rounding

Euan

How are we supposed to interpret this? A factor of 10 difference between 2 sources? And we criticise the Arabs for not being able to count their oil in the ground!

The API distillates number looks dodgy.

Gail

I asked API about the difference. I got this answer from Ron Planting, API's manager of statistics.

Here are some of the reasons API and EIA data may differ:

- Different samples. We get 85 to 90% of industry volumes in our survey on major series, but it's always possible that we have someone EIA doesn't have or EIA has someone we don't have.

- Different estimation techniques. We have a series of statistical models for estimating for the nonrespondents. No doubt EIA does as well, but the techniques may differ.

- Dealing with questionable data. We spend a great deal of our efforts every week looking for unusual data, unexplained large changes, refinery production that doesn't agree with inputs, and so on, and go back to the respondents for correction or explanation. If we still feel we can't trust that piece of data, we reserve the right not to use it. One would expect that EIA also does this, but it's understandable that judgements may differ.

- EIA periodically "rebenchmarks" its weekly data (and normally posts a notice that it has done so). This can cause week-to-week changes that are a product of rebenchmarking rather than a change in actual supply and demand. API tries to make gradual changes to its estimation methodology over time, so that week-to-week changes still reflect changes in the reported data.

Gail

I received an additional e-mail, pointing out this footnote at the bottom of today's "Weekly Petroleum Status Report":

Data for the week ending January 11 reflect benchmarking to the October Petroleum Supply Monthly values.

This footnote is found near the bottom of this report:

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_pe...

Thus, the EIA data reflects a change in benchmarking, so is not truly reflective of an inventory change.

Euan

Thanks Gail,

So its the API we should believe and this report just came in about 4 million barrels below the Bloomberg poll. Someone mind telling the traders this:-((

Leanan

FWIW...traders seem to credit the EIA more than the API. Also, the weekly reports that are "benchmarked" are seen as the most reliable of all. At least, that's what the market mavens at PO.com told me. They said when the benchmarked reports come out, the traders will respond more strongly than usual, because it's seen as more accurate.

Any the wiser? If the DOE numbers reflect a shift in last week's benchmark then I'd have to bet on the API. Its interesting to see the uncertainty bound up in these weekly data - so the only solution is to look at a chart and follow the trend.

what does rebenchmarking mean?