Discrepancies in Oil and Product Inventories

The Energy Information Administration (EIA) recently released its weekly report on oil and product inventories, which has brought attention to certain discrepancies in week-to-week changes. These differences in stock levels have led to varying interpretations of the actual amount of stock change in the market.

According to the EIA's report, crude oil stockpiles decreased by 6.9 million barrels in the week ending December 22, reaching a total of 436.6 million barrels. This represents a decline of 7.1 million barrels compared to the reported levels of the previous week, which stood at 443.7 million barrels.

Interestingly, several other data series also exhibited deviations from the reported levels, further adding to the complexity of the situation.

After analyzing the situation, the EIA released a statement explaining that the "discrepancies" in the data series came about due to corrections made to propane/propylene stock numbers from the previous week. These revisions prompted changes across the entirety of the publication.

The EIA clarified that the decline in crude stocks was calculated using these revisions, and although the levels from the previous week weren't provided, they could be derived by adding the weekly difference to the December 22 levels.

Notably, the EIA has undergone significant changes in data collection methods this year. Phil Flynn, an analyst at The Price Futures Group, attributes these challenges to factors such as the shale revolution and increased gas production. Furthermore, the United States shifting from being a major oil importer to a significant exporter may have also influenced the accuracy of the data.

As adjustments are still being made, it appears that the EIA continues to work towards improving its reporting accuracy in light of these ongoing shifts in the energy landscape.

Oil Prices Unaffected by EIA Data Discrepancy

The Energy Information Administration (EIA) recently announced that its weekly report, originally scheduled for early November, was postponed in order to update its systems. According to the EIA, week-on-week differences in the report will align with reported levels in the upcoming status report. However, it is expected that four-week averages may be affected until mid-January, and year-on-year differences will not match until December 2024. The EIA has not provided any further comments on this matter.

Despite analysts predicting a reduction of 2.4 million barrels in crude stocks, the actual draw was much larger for the previous week. Surprisingly, this caused oil prices to fall on Thursday. However, crude prices have remained steady on Friday, although they are still on track for a significant loss of around 10% for the year.

Dennis Kissler, Senior Vice President at BOK Financial, sees no issue with the discrepancy in the EIA's data report. He believes that the market's reaction to the inventory report is mainly due to the attention being paid to the build-up of stocks at Cushing, Oklahoma, which serves as the delivery hub for Nymex crude contracts. The EIA reported that stocks at Cushing increased by 1.5 million barrels last week, reaching a total of 34 million barrels.

Kissler also noted that the current trading period is towards the end of the year, resulting in thinner volume and a potentially more erratic market. However, he remains confident that this should not be a cause for concern.