Laura bell
Statistics Editor
Oil & Gas Journal highlights various vital industry statistics each week in the US Industry Scoreboard. Data are gathered primarily from the Energy Information Administration's Weekly Petroleum Status Report (WPSR).
Those using the information from the WPSR must understand the week-to-week variations in the data and how that can affect the way markets react to this information. For example, if WPSR releases data that shows a hefty single-week increase in a particular product, one might interpret that there was a large increase in consumption for that product. However, it may not.
Readers also should understand that the weekly estimate of petroleum products is based on products that were "supplied" to the US markets, not an actual end-use consumption figure. EIA calculates the product supply estimate by the "net barrels made available to the economy from that week's production and imports, minus any change in that product's stock level from the prior week, and less a model-based estimate of exports of that product."
Though product supplied is a good indicator for consumption, supply data can actually fluctuate more than consumption. Supply estimates for products can vary week to week due to transporting from primary storage to refineries, pipelines, and terminals.
Stock level changes
Fluctuations in product supplied can be examined by looking at the changes in stock levels from week to week. For example, a product distributor at a secondary storage facility may receive from a refinery during the first week a larger quantity of product than normal, thus appearing there was a larger cutback of primary stock levels and an increase in consumption of that product.
This basic illustration demonstrated a refiner's trade decision to shift product out of primary storage in the first week vs. the second week, thus resulting in a decreased appearance of a lower consumption of that product in the second week. Using an average of these 2 weeks would be a better observation of comprehensive inventory changes, to see how those changes affected product supplied.
Survey timing
Timing also affects the weekly variations to the product supplied estimates. WPSR survey respondents are to account for their weekly activities each Friday by 7 a.m. EST. So all pipeline and terminal inventory changes, refinery operations, blending activities, production, and imports must be accounted for by that time.
Import figures can be directly affected by this deadline. Incoming vessels that are held up in US customs may miss the reporting deadline by just minutes; therefore, the imports for that product are not accounted for until the following week.
EIA gives an example of this timing issue: If a vessel carrying 300,000 bbl of gasoline is delayed because of weather or other issues and cannot pass US customs before the 7 a.m. deadline for the first week, the gasoline product is then included in the second week's estimates, resulting in the first week having a lower gasoline product supply figure.
Because several vessels could arrive just before or just after the weekly deadline schedule, product supplied estimates from week to week could see large fluctuations than normal expectations.
Again using a moving average of some sort would eliminate those confusing and conflicting swings in product supply estimates.
Both EIA and OGJ utilizes a 4-week average and year-to-date averages to better represent the relevancy of the statistics so that the reader can get a better understanding of what truly is happening in the marketplace. Though each week's data are important to the overall market movement, it is "not sufficient to distinguish between the beginning of a new trend, the end of an existing trend, or simply a 1-week anomaly."
OGJ's US Industry Scoreboard looks at products supplied for motor gasoline, distillate, kerosine jet-fuel, residual fuel oil, and other products.
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com