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Oil Traders, Are You Aware Of This Problem With EIA Data?

By Ellen R. Wald, Ph.D.CommoditiesOct 04, 2017 05:05AM ET
www.investing.com/analysis/what-eia-data-should-oil-traders-be-looking-at-200216857
Oil Traders, Are You Aware Of This Problem With EIA Data?
By Ellen R. Wald, Ph.D.   |  Oct 04, 2017 05:05AM ET
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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?

Oil Traders, Are You Aware Of This Problem With EIA Data?
 

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Oil Traders, Are You Aware Of This Problem With EIA Data?

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Comments (9)
Cyberlord Barron Trump
CyberlordBarron Oct 08, 2017 9:52PM ET
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Dad is looking into the EIA shenanigans.
edmund fletcher
edmund fletcher Oct 05, 2017 2:45AM ET
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Simple answer would be to shift to a monthly report.. Stop the weekly report 'madness' around incorrect data.
Do Deikins
DoRight Oct 05, 2017 2:45AM ET
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Not incorrect, just not as 'precise' as some would like to believe.  For myself, I appreciate the weekly data points of both the API and EIA 'estimates' - just as I use data points from other sources, some of which I have gleaned from these articles of Dr. Wald.
Do Deikins
DoRight Oct 04, 2017 5:11PM ET
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Knowing the difficulties in analysis of decentralized data, I am duly impressed that the EIA and API get as close as they do.
Pianko Rao
Pianko Rao Oct 04, 2017 1:49PM ET
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This report came on 1st week of September.So its already discounted
chip isbell
chip isbell Oct 04, 2017 1:43PM ET
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Thank you for the explanation.  Numbers and direction don't seem to match.
Brus Bedict
Brus Bedict Oct 04, 2017 1:14PM ET
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All this doesn't really matter...honestly. Market is all about relevancy and people need patterns, that's all. May be it matters for long term traders, but not at all for short-term.
Karl Briscoe
Karl Briscoe Oct 04, 2017 1:12PM ET
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Thank you Ellen for your enlightened educated outlook, but obviously nobody in the market cares for the facts, or truth. I've been studying comparative Inventory levels, & historical rig counts for a while now, & can say with a great degree of confidence that we are heading straight into the worst oil shortage in the history of the industrialized world. But there again, no one seems to give a rip. As long as paper speculators can keep turning the oil market on it's head for a 500 dollar profit every day, they will continue to keep the upstream producers from ever being able to catch up with our ever growing demand for product. This will in turn lead to many severe shortages in the not so long term future. And these shortages will extend to food shortages as well as gas, & diesel shortages. This is insane, but the central banks of the industrialized world as well as our governments have caused this, & there is no stopping it now. Thank you, & I wish you had more influence, but you don't
User 22
User 22 Oct 04, 2017 1:07PM ET
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Going to 35
Rafael Nunes
Rafael Nunes Oct 04, 2017 1:07PM ET
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Going to 53?. changed the number?
Tahir Azhibek
Tahir Azhibek Oct 04, 2017 1:02PM ET
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Interesting
 
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