EIA Weekly Data – Don't Count On It! #petroleum

By 18th November 2015 Industry News No Comments

I suppose that the domestic producing industry breathed a sigh of relief Wednesday when the EIA announced that the buildup of US inventories was a meager 0.03 million barrels a day. That level of inventory accumulation is certainly manageable.

But lookout! If one examines the numbers behind this week’s report he might see a cause for alarm. According to the EIA report, imports from Saudi Arabia, Mexico, Venezuela and Iraq dropped below the previous week by more than a million barrels a day. This was in spite of yesterday’s Oilpro post that described all the tankers awaiting discharge, and the day before’s post which mentioned the large quantity of Iraqi crude destined for the USGC. So what is “The rest of the story”?

We are left with three basic choices. 1) Saudi Arabia, Mexico, Venezuela and Iraq suddenly found other customers for their oil or 2) The receiving tankage was so full that the tankers could not discharge and had to wait in line for some space in the tank or 3) The individuals who were supposed to report their numbers to the EIA were lax in fulfilling their responsibilities.

Let us examine the ramifications of each choice.

1) Saudi Arabia, Mexico, Venezuela and Iraq suddenly found other customers for their oil. Not a chance. Maybe one or even two might have found a short-term alternative outlet. But all four? Impossible.

2) The receiving tankage was so full that the tankers could not discharge and had to wait in line for some space in the tank. This is within the realm of possibility. But if it is true, then the price of oil in the Gulf Coast should begin reflecting this operational surplus very promptly with a precipitous drop. Therefore we will know whether this is the answer in a week or two.

3) The individuals who were supposed to report their numbers to the EIA were lax in fulfilling their responsibilities. This is the most likely answer. If it turns out to be true, then next week’s inventory report will play catch-up, and the inventory report will show a huge build in stocks.

If you are a gambler, as they say, “You puts up your money and you takes your choice!”