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EIA vs. API: Comparing Crude Inventories Announcements

EIA vs. API: Comparing Crude Inventories Announcements

The weekly update on the amount of crude oil inventories in the United States is one of the most important pieces of data regarding the oil market. Oil traders and analysts closely watch changes in inventory levels and use them in their analyses and expectations for oil prices. Inventory data is so important because the amount of oil inventories serves as a proxy to oil demand. If crude oil inventories increase weekly, it indicates that demand for oil is falling short of supply, while if the oil inventories data shows a decline in oil inventories, it indicates that demand is surpassing supply. With the supply and demand balance one of the most crucial facts in a commodity's price, this inventory data has a direct impact on oil prices. Live oil prices often swing dramatically when the week-over-week change in oil inventories is significantly different from what analysts forecast.

The two main reports that traders use for a reading on weekly petroleum stockpiles are the reports released by industry group The American Petroleum Institute (API) and the government report released by the U.S. Energy Information Administration (EIA). Among the two reports, The EIA report is more highly regarded. Find out why.

The American Petroleum Institute
The API is an industry group that represents American companies involved in producing, refining and distributing petroleum and petroleum products. The API produces the Weekly Statistical Bulletin, which reports on refinery operations and production of the most important petroleum products that account for more than 80% of total refinery production. Crude oil inventories are included in this report. The API normally releases its Weekly Statistical Bulletin on Tuesday at 4:30 p.m. ET. After a Monday holiday, it is released on Wednesday.

The Energy Information Administration
The EIA publishes the EIA Weekly Petroleum Status Report on Wednesday at 10:30 a.m. ET, but after a Monday holiday, it is released on Thursday at 11 a.m. ET. The EIS report provides information on the supply of oil and the level of inventories of crude oil and refined products.
Data Collection
The EIA requires major oil companies to complete their oil inventory surveys. The EIA surveys include a stern disclosure for noncompliance or intentional wrongdoing, and there are civil and criminal penalties for failure to file accurate and timely data. The American Petroleum Institute collects that data “at will,” but according to the API, the average sample coverage of the API data is about 90%. The stern disclosures the EIA data includes have analysts and traders believing that the EIA’s data is more accurate that the API’s.
Congruency of Reports
The API data is often taken as a prelude to the EIA data, as it is released the evening before the EIA report. There is definitely a relationship between the two data sets; 80% of the time the data is directionally aligned. While the data is often similar, at times there have been large discrepancies. For example, on January 9, 2018, the API reported that weekly crude oil inventories decreased by 11.2 million barrels, but the following day, the EIA reported a decrease of 4.9 million barrels. Because there is a relationship, and due to the strictness of the EIA collection, it is relied upon in a higher regard.
Other Differences

Although traders may hold the EIA data in higher regard, they have been relying on the API data for a longer period. Since 1929, the API has been reporting oil inventory data weekly. The EIA started releasing its weekly inventory report in 1979. Of note, the EIA also collects and reports oil production data and, therefore, provides a more complete picture of the state of the U.S. oil market.