Data vital to energy markets

Sam Fletcher
Senior Writer

Fear that the Organization of Petroleum Exporting Countries would undersupply peak market demand for crude in July and August increased the price at which refiners were willing to draw down crude stocks and inflated oil prices in June and July, the International Energy Agency in Paris said in its Aug. 10 monthly report.

Therefore, said IEA analysts, prices remain high and crude futures markets "have been toying with backwardation"—in which futures prices for near-month contracts exceed those of farther-out months—despite high levels of crude stocks among countries of the Organization for Economic Cooperation and Development at the end of June. The September contract for US light, sweet crudes closed at a record high of $78.21/bbl July 31. By Aug. 10, it closed at $71.47/bbl.

Data problems
However, IEA complained: "With the limited hard data to hand, there is still a wide margin for interpretation of current and future fundamentals. We have weekly data for the US and Japan, but to get a preliminary picture of the OECD takes 6 weeks." Outside the OECD, it said, "there is still very little information on stock levels."

Although some countries are struggling to establish data collection systems, most are monitoring stock levels at ports, loading terminals, and refineries. "Many (if not most) companies probably have the ability to report these data on a real-time basis. So why the lack of data?" IEA wondered.

IEA reported two common answers to that question. "Some non-OECD officials have indicated that several years of high prices have led the industry to run on minimal stocks, and they worry that if they release this information, they might push oil prices higher than they already are. That is the easiest issue to address: do not worry—the market already implicitly assumes they are zero," it said.

The second argument is that stock data are commercially sensitive. "That may be the case, but keeping it secret has scarcely led to consumers paying less, and the US and Japan show [timely reports] can be done. US regulations are generally very responsive to industry's needs, yet the comprehensive weekly data published by the EIA demonstrate that commercial sensitivities can be overcome," IEA said.

"This is not just about data coverage. It is also about the timeliness of data. In the OECD, weekly European data are conspicuous by their absence (even China and Russia industry publications provide some weekly data!). While there are some genuine concerns in Europe about cost and quality of the trade data available, some of the often-heard arguments against the publication of more frequent data fail to see the bigger picture."

Some statisticians claim data quality deteriorates if produced more frequently. Others are more willing to accept less accurate but more timely information. "Weekly data are less accurate than monthly data; monthly data are less accurate than annual." But data quality improves when collection is regular and subject to continual assessment. "It is also wrong to interpret the focus on the US weekly data as a sign that more timely data increase market volatility," IEA said. "Experiences in other commodity markets show that it can have the opposite effect."

IEA argues that more-comprehensive and more-frequent data improve market understanding. If that knocks several hundredths of a cent off the price of each barrel of traded oil, it would be more cost-effective than the current situation, where "uncertainties associated with a lack of data could bear a much higher cost," IEA said.

Furthermore, the agency argued that traders' usual focus on the high level of US crude and petroleum stocks as evidence that the market is well supplied ignores the low level of Japanese crude stocks and the average levels of European inventories at average levels. In term of future demand, IEA said, "These stocks are below normal, and logic suggests they may be even lower from a global perspective. Our projections suggest stocks will be drawn down further in August and September, yet when OPEC members come to assess the market at their Sept. 11 meeting, they will have to hand only OECD data from June. If ever there was a compelling argument for the benefits of wider and more frequent stock data coverage, it is now."

US inventories
US crude inventories fell 4.1 million bbl to 340.4 million bbl in the week ended Aug. 3. Gasoline stocks dropped 1.7 million bbl to 203 million bbl. Distillate fuel inventories rose 1 million bbl to 127.5 million bbl.

(Online Aug. 13, 2007; author's e-mail: samf@ogjonline.com)


Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

Woodside-led Browse FLNG venture enters FEED phase

07/01/2015 The Woodside Petroleum Ltd.-led Browse LNG joint venture has entered the front-end engineering and design phase for a floating LNG (FLNG) developme...

Case for Keystone XL has grown stronger, TransCanada tells Kerry

06/30/2015 Canada is taking strong steps toward combating climate change, and the proposed Keystone XL pipeline crude oil pipeline remains in the US national ...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


Driving Growth and Efficiency with Deep Insights into Operational Data

When Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST



On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected