What A Story -- It Looks Like -- From The Headlines -- That The EIA Simply Made A Major Adjustment -- But If So, The API, Also? August 2, 2023

Locator: 45303OIL. 

Tag: the draw; 17-million-bbl draw; 

This is from "Focus on Fracking," late Sunday night, July 2, 2023, the regular weekly update with a lede that should have gotten my attention --

So, then, several paragraphs into report, in the usual location and usual format, which I will break up into small bites:

Meanwhile, US oil refineries reported they were processing an average of 16,478,000 barrels of crude per day during the week ending July 21st, an average of 107,000 fewer barrels per day than the amount of oil that our refineries were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 86,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US. 

So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending July 21st appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 2,415,000 barrels per day less than what our oil refineries reported they used during the week. [SAY WHAT?]

To account for that obvious disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +2,415,000 ] barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error of that magnitude in the week’s oil supply & demand figures that we have just transcribed.... 

Moreover, since last week’s “unaccounted for crude oil” figure was at [+823,000] barrels per day, that means there was a ​1,592,000 barrel per day difference between this week's oil balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, and therefore useless... 

However, since most oil traders respond to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably reliable by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they had hoped to do about it).

I guess that's what they decided to do about -- today in the weekly EIA petroleum report, simply state there was a 17-million-bbl draw. Without comment.

And with a 17-million-bbl draw, WTI drops 2% suggesting "no one" believes this number and that the EIA and the API are simply "reconciling" their spreadsheet, just as we all used to do once a month when we used to reconcile our checkbooks. 

That seems to be beyond the pale, as they say, but then how does one explain almost the same number the API got -- a draw of 15 millions?

 

I thought the API and EIA were independent, but my hunch is they use each other's data to a great extent.

All the folks on social media who follow these numbers very closely noted this, but no one has offered an explanation, plausible or otherwise. 

But if the average change in crude oil in storage is up or down one or two million bbls from week to week, there's no way a 17-million-bbl draw can be reported without an analysis.

I assume RBN Energy is all over this and sometime this month (August, 2023) we'll get a blog discussing this.

Along with that same piece of news -- about the 17-million-bbl draw, did you all note the weekly gasoline demand chart?

This is simply ghastly ... and again, reported, without comment by anyone.