By Shariq Khan
NEW YORK (Reuters) – A series of dramatic revisions to official U.S. oil consumption data has unnerved market participants who rely on the numbers for trading.
Traders and analysts watch weekly and monthly supply and demand data from the U.S. Department of Energy’s statistical arm, which, given that the U.S. is the largest producer and consumer of crude oil and fuel, can influence decisions that affect billions. of dollars in energy flows.
The releases also inform everything from political decisions in Washington to how much OPEC+ members will produce.
The Department of Energy’s statistical arm, the U.S. Energy Information Administration, published a monthly update last week that showed U.S. oil consumption hit a seasonal record in May as motorists burned more gasoline than they could. before the pandemic.
That data conflicted with weekly updates published that month, which showed that oil and fuel demand was struggling to match last year’s levels. [EIA/S]
It is not uncommon for monthly data – which are released with a two-month lag – to differ from preliminary weekly data by about 100,000 to 200,000 barrels per day (bpd), relatively marginal changes in a market that consumes 20 million bpd.
However, recent reviews have painted two entirely different demand pictures.
Weekly data from May, for example, suggests that US gasoline consumption was just over 9 million barrels per day in May, compared with over 9.1 million last year – which traders interpreted as a sign that electric vehicles, hybrids and more efficient engines were reducing motor fuel use.
Separately, however, the monthly oil supply update published last week showed that U.S. gasoline consumption in May was nearly 400,000 bpd higher than that figure and surpassed 2019 levels despite higher fuel costs.
That, and revisions to other products, shifted U.S. oil demand to a seasonal record of 20.8 million bpd in May, 800,000 bpd above weekly estimates. Similarly, in April, oil demand was revised upwards by 400,000 bpd relative to weekly estimates.
The EIA says May’s weekly numbers were wrong because preliminary readings overestimated gasoline production and underestimated exports. The agency does not expect the weekly estimates to be as accurate as the monthly data, but rather to be consistent in presenting general trends.
The EIA is always working to more closely align its weekly and monthly data and has made several changes to both in an effort to better reflect the oil market, a spokesperson said.
‘A LITTLE WORRYING’
However, despite these efforts, major revisions in recent months are undermining market confidence in the reliability of the data, longtime market observers said.
“It makes you wonder why anyone is paying attention to the weekly numbers,” said Tom Kloza, head of energy analysis at the Oil Price Information Service (OPIS). Many fuel traders expressed disbelief at the EIA’s revisions to its numbers in May, he added.
OPIS publishes its own estimates of gasoline demand using data from about a quarter of the more than 150,000 retail fuel distribution locations in service across the country. This data has consistently shown an annual deterioration in demand, aligning more closely with the EIA’s original estimates for May.
Data from GasBuddy.com, a widely used fuel price tracking service, is also more in line with previous weekly estimates. GasBuddy data for May pegs gasoline demand at 8.87 million bpd, close to the EIA’s weekly estimates at the time.
A trader at one of the largest goods distribution companies said the revisions left them confused and warned that such changes could ultimately harm consumers, as decisions about how much fuel to import are influenced by data from the EIA.
Admittedly, traders subscribe to dozens, if not hundreds, of private data feeds in addition to government data. Some even charter their own helicopters to fly over storage tanks and estimate how much oil has flowed in and out of them through shopping centers.
The US EIA is the only government agency that issues periodic, granular updates on consumption. While the revisions raise questions about reliability, most market watchers say they consider the EIA data to be an impartial view of the market at a time when the other two major energy reporting agencies – OPEC and IEA – are further apart than ever. on the direction of oil markets. .
“It’s a trend that concerns me a little,” says Patrick De Haan, analyst at GasBuddy.
“The EIA has been the basis for analysts, but skeptics may be gaining more validity in their arguments that the EIA numbers are not matching the real world.”
(Reporting by Shariq Khan in New York; Editing by Liz Hampton and David Holmes)
