Last week, the U.S. Energy Information Administration (EIA) reported that U.S. oil production in the month of July totaled 9.238 million bpd. This figure is actually 178,000 bpd lower than the weekly estimates the EIA provided throughout the month of July. The report, along with other factors, pushed oil prices to 26-month highs last week. This revision highlights a key weakness in weekly oil production data from the EIA – specifically, most of the report is based on projections and not on collected data of actual barrels of oil produced.
The weekly petroleum production figures rely on some reported data, but according to the EIA, the reports are made, “largely [using] estimates from the [EIA’s] Short-Term Energy Outlook.” This is why the numbers are so often revised. They are projections, not tabulations of past production.
The EIA does collect sample data on actual production from companies in major oil production regions across the United States, (called Form EIA-914) but those data are released on a 2-month delay. The Form EIA-914 numbers present a much more accurate picture of U.S. production than the weekly figures released each Wednesday. However, because of the 2-month delay, these data do not offer a real-time glance for investors.
The EIA has made significant strides in recent years towards reporting more real-time data but accurately reporting production on a weekly basis is a difficult endeavor. Those that do report weekly data to the EIA must report their figures for the previous week (ending Friday) by the next Monday so the EIA can analyze and aggregate the data on Tuesday and report it to the public on Wednesday. Traders should recognize the inherent weakness in the EIA’s Weekly Petroleum Status Reports in order to anticipate potential subsequent revisions and their impact on the market. At the same time, the mere presence of the weekly EIA production report does impact the market in real-time, so traders must be aware of the numbers each Wednesday afternoon (Eastern U.S. time).
Last week, the EIA’s monthly Form EIA-914 report for July showed less growth than anticipated in the Eagle Ford and Permian regions and production in the Gulf of Mexico higher than had been anticipated. What will the report at the end of October reveal about what really happened in August?
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