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Oil Tanker Counts: Can You Trust The Data?

By Ellen R. Wald, Ph.D.CommoditiesAug 10, 2016 04:50AM ET
www.investing.com/analysis/oil-tanker-counts:-can-you-trust-the-data-200147045
Oil Tanker Counts: Can You Trust The Data?
By Ellen R. Wald, Ph.D.   |  Aug 10, 2016 04:50AM ET
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In an oil market easily impacted by speculation, data on oil exports and imports can easily cause the price of oil to fluctuate. Approximately 63% of the world’s crude oil is transported by sea; Thus, the business of collecting, aggregating, and extrapolating this data has become an industry unto itself, dominated by private companies that are not necessarily disinterested players. There are about ten companies that offer tanker tracking data and analysis to paying clients, a few of on which are discussed below.

With oil, one of the major questions currently is whether these data show that the global glut is being exacerbated or alleviated. Modern satellite tracking technology makes public the movement of oil tankers, in much the same way anyone can track the path of an airplane. However, companies in the business of tracking tankers take much more into account when they provide data to their paying clients. Thus who provides the data can have a critical impact on the information clients receive.

For example, ClipperData, an American company, uses a proprietary method of analysis that, it says, gives the company unique insight into the cargoes and destinations of specific tankers. According to Matt Smith, Director of Commodity Research:

“Our data is based on a number of different inputs. We use the satellite tracking, the AIS, which is freely available, but we also have a relationship with a company that collects the port agent reports … so that’s how we identify what those cargoes are. We’re also using a Bayesian probability model and so we have all the docks and all the ports and all the different countries and all the different regions identified and we’re tracking those vessels as they leave and assigning probabilities to where that cargo is going.”

Other reporting services, such as Thomson Reuters, offer clients interactive maps that can track individual vessels. Thomson Reuters also provides information about the vessels’ histories and current cargoes as well as “authoritative sources” from its own “Research & Forecasts team.” In other words, Thomson Reuters offers clients the same widely available tracking data coupled with internally compiled information and its own proprietary expert opinion. It is unclear if algorithms play a large part in this analysis.

Windward Maritime, an Israeli company, relies heavily on algorithms and closely guarded analytical methods. According to CEO Ami Daniel:

“Our key technology and IP is the ability to look at all the raw data in the world and take it into our system, clean it, and create coherent entities, which means vessels.” Daniel made clear that the methods are not public. He said, “Our special sauce, our secret sauce, is our ability to translate the ships’ behaviors into different insights.”

These different methods lead to different results – sometimes markedly. Disparities, depending on which traders trust which information, can impact oil markets through speculation. A notable example in the past few months is the disparity in analysis in the numbers provided about Iranian oil.

For instance, over the last several months, Windward has publicly provided data claiming that Iran has significantly more oil stored than other companies and analysts report. For example, at the beginning of July, Reuters reported that Iran had 30 million barrels of oil in floating storage. Windward reported a number more than 60% higher. This has important implications. If Iran actually has had more oil in offshore storage than others report, it could mean that Iran’s production levels are less than otherwise believed and that its exports over the last few months have come from stored oil.

If Iran’s production capacity is below the commonly accepted number, then we are less likely to have as severe of a global oversupply. Therefore, if it is shown that Iran’s storage has been higher than was commonly thought, the price of crude could likely rise. (Note: just last week, Windward reported a two million barrel drop in their numbers for Iran’s floating storage, but it is still significantly higher, at 46.7 million barrels, than other reports).

However, Windward was the only company reporting numbers this high. Finance Product Manager Omry Hochberg explained the Iran discrepancy by highlighting Windward’s particular methods. He said:

“Some of these vessels are transmitting on and off, so they are not transmitting all the time. We see them transmitting for two weeks and then disappear for three weeks and come back. It’s another issue when a lot of the people look at the Iranian storage situation, they look at a snapshot in time. They said, OK, let’s see, which vessels are transmitting, these are the floating storages. But what we do is we look at the activity of the vessel throughout time, and it pops out when a vessel stops transmitting. So we can understand that actually this vessel is a floating storage but it’s just not transmitting right now.”

On the other hand, many traders and hobbyists who watch tanker data remain skeptical. Samir Madani, (follow him @Samir_Madani) a trader who helps coordinate a cache of open information on tanker data and other oil trading insights under the hashtag #OOTT (Organization of Oil-Trading Tweeters) said, “Any kid can stand on the shoreline with a mobile phone and take a shot of those tankers in Asaluyeh (a port in Iran). I can visually tell you how much each vessel has, just by looking at the draught.” Madani’s point is that one can tell how full (or empty) a tanker is by how high it rises above the ocean water. (For an example, see here). Of course, tracking companies seek to add value by informing their customers about the contents as well as the volume of cargo and a tanker's likely destination.

Many traders seem to have their own preferred methods and do not consider the “extras” these companies provide beneficial. Over time traders will likely choose which method or methods they trust most.

For come publicly available satellite tracking services, try these below. Readers, if you have a favorite, please share in the comments.

VesselFinder

MyShipTracking

MarineTraffic

Shipfinder

Oil Tanker Counts: Can You Trust The Data?
 
Oil Tanker Counts: Can You Trust The Data?

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Do Deikins
DoRight Aug 14, 2016 5:12PM ET
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Thanks Dr. Wald, The sites listed at the end are excellent. While I lived in south Asia for a time, I never realized how close India is to the Gulf oil. Another interesting tidbit learned from the graphics is how the shipping of India is so concentrated in Mumbai (Bombay)..Ellen, a question I would pose is if there exists a similar list being updated from satellite comm, but is textual rather than graphical? The graphical is nice for getting a broad picture, but text is much better for doing real work.
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Benson Njonjo Ndehi
Benson Njonjo Ndehi Aug 12, 2016 1:09AM ET
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Every time US government spending for the trailing 365 calendar days is more than $4.3 trillion, oil does well. I have data for both variables going back to mid-2005. We techies own Wall Street.
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Brad Smith
Brad Smith Aug 10, 2016 3:03PM ET
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Thank you Ellen for this incredibly informative piece. As there are no reliable methods to verify the accuracy of the oil tanker data, I assume there will also be no reliable way to determine the overall accuracy of these data firms like Windward. With the way Iran operates, I'm skeptical if we'll ever hear an accurate number on their oil stores.
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