US Crude Oil Storage -- October 9, 2016

Updates

October 10, 2016: I've always appreciated Art Berman. A reader had this to say:

The use of the word "swindle" in the headline was unfortunate, and I'm almost certain that click bait wasn't Berman's choice...there is no swindle here, just inaccurate reporting of data...the government certainly doesn't have the assets in place to produce exact data on production from every US oil well, exact amount of oil refined by every refinery, and the amount of oil stored in every tank across the entire country for every Friday by the Wednesday of the next week... more likely, the EIA is only giving an estimate in a range, like Census estimates of housing data (which also move markets) which is collected by canvassing Census agents who drive their districts and record observations on their laptops...monthly new home data typically comes up with a 90% confidence figure +/- 15%; oil stats are certainly better but not exact....I would attribute the deterioration of the data to budget cuts sooner than any purposeful fudge on anyone's part...

Berman's piece should be read carefully, as he is exposing a fudge factor that the EIA uses weekly that I've been checking every week for a year...there's no deceit about it, it's there every week on line 13 of the oil balance sheet:https://www.eia.gov/petroleum/supply/weekly/pdf/table1.pdf.

Since the other numbers which have their accuracy determined by that fudge factor are those that move the markets, that weekly adjustment should be covered by the media, just like imports and inventory, so everyone knows how inaccurate those weekly numbers are...I had to discover it myself when iIcould see that the week to week numbers just didn't add up..

Two additional comments from me:

• the EIA data is also reported almost two months late, including import data -- one would think import data should be "instantaneous" in this day and age; a two-month-delay allows insiders an incredible unfair advantage; and,
• a reminder: the EIA recently made a reporting change. Starting with the Weekly Petroleum Status Report published on October 13, 2016, the U.S. total commercial crude oil inventory weekly data series will no longer include lease stocks.

Later, 9:17 p.m. Central Time: Art Berman has this story at Oilprice, also, with this "headline":
"the billion barrel oil swindle: 80% of US oil reserves are unaccounted for." This is Art's bottom line in this article:

There is a lot more oil in storage than the amount that can be accounted for by domestic production and imports.

In the Forbes article: 

The truth—however improbable—is that inventories are probably much lower than what is reported.

I must be missing something.

Original Post

 

Sometimes you just have to skip to the end of the story. I was aware of the "inventory" problem (and posted one story on it some weeks ago) and was wondering when some major business magazine would provide a more in-depth look. Art Berman has an article in Forbes, sent to me by a reader, thank you.

This is the headline: US (crude oil) storage filling up with unaccounted-for oil. Well, that doesn't sound good for oil bulls?

I started reading the article, and by page 4 or page 5 my mind started drifting. It would help if the article were one full page instead of divided over six pages with a gazillion ads. But by page 4 or page 5 my mind seemed to be filling up with unaccounted-for drivel.

So, I jumped to the last line in the article:

The truth—however improbable—is that inventories are probably much lower than what is reported.

There are two words in that last sentence to note: everyone catches the "lower," but the interesting word is "much."

I will have to go back and re-read the entire article.

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The US Shale Cartel

The reader also sent another Forbes link. I have not read the story yet. But anyone calling the US shale industry a "cartel" is using the word loosely. And incorrectly. And it sends the wrong message.

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Price Of Electricity Might Dip

First Time In 14 Years

Natural Gas

Those three phrases pretty much sum up the entire article. From Denver Business Journal.

That's the fourth or fifth story the same reader sent me over the past couple of days. Whew! Finally caught up.

From the article:

During the first six months of 2016, residential electricity prices nationwide averaged 12.4 cents per kilowatt-hour (kWh), or 0.7 percent less than the first half of 2015, the EIA said in its latest Today in Energy brief.

The article does not mention how wind and solar put upward pressure on prices.