Crude oil is the most widely traded commodity globally due to its strategic importance in the global economy and politics. It understands the market dynamics, key fundamental drivers, future prospects, technical forecast, and current news & trends to trade in crude oil.
Crude Oil Stock, also known as Crude Inventory, is the stock of unrefined petroleum available with the oil-producing entities at any point in time. It is measured as a number of barrels. Oil-producing entities and countries calculate the stock across the globe to manage the delicate demand-supply position of crude oil.
Crude Oil Inventory Data is referred to reports published every week as the count of oil stockpiles changes compared to the prior week.
Some critical crude oil inventory Data followed worldwide are:
U.S. EIA Weekly Distillates Inventories:The U.S. Energy Information Administration (EIA) provides a weekly update on domestic inventories in a number of barrels.
U.S. API Weekly Crude Oil Inventories:API stands for American Petroleum Institute, which releases weekly data on inventory for U.S. crude oil, petrol, and distillate stocks
U.S. Crude Oil Inventories:This inventory reports the weekly movement in the quantity of commercial crude oil with U.S. companies. U.S. crude oil inventory data is released on Wednesday night between (08:00 PM to 09:00 PM)
U.S. Gasoline Inventories:This report considers the gasoline stock used in vehicles as fuel. It measures the change in the barrel stock for commercial gasoline maintained as inventory by dealing companies in the week.
How to Read Crude Oil Inventory Data?
The Energy Information Administration's (EIA) crude oil inventory measures the weekly change in the number of barrels of commercial crude oil held by U.S. firms. The Crude oil inventory levels reported by EIA Crude oil inventory as the petroleum products prices, which can impact inflation.
Analysts chart the demand-supply equation basis the inventory reported. If the weekly increase in crude inventories is more than expected, demand will decrease, and crude prices will tank. Similarly, if a reduction in inventories is not as per projection, it indicates higher demand, and crude prices are likely to go up.
This report impacts the price movements significantly and has a crucial overall impact due to the correlation of oil prices with the global economy. It impacts the currency movements and crude oil future trades as well.
The U.S. API weekly crude oil stock inventory report is released on Tuesday at 02:00 AM (IST); this report indicates the crude oil movement. This report covers U.S. Crude inventories and stockpile numbers related to refinery production, imports, and stocks of the four essential petroleum products: motor gasoline, kerosene jet fuel, distillate fuel oil, and residual fuel oil.
Traders use this data for day trades in the next day's market session on Wednesday when the U.S. Crude Oil inventory data report is released between 08:00 PM to 09:00 PM.
The API data is analyzed precursor to the EIA data, as it is reported an evening before the EIA report. These two reports are interrelated to each other. The monthly estimated numbers as per analysts are in the range of 1% difference from each other majority of the time
These reports are to be read in combination and not in isolation.
For example, suppose the U.S. Crude Oil inventory today reports lower than expected barrel stock. In that case, the price of crude oil will likely go up, anticipating a stronger demand than the previous week. However, suppose the gasoline or distilled oil inventory with commercial firms shows high than expected inventory today. In that case, the upside in crude oil prices will be contained with this data, anticipating a higher supply and stockpile than an earlier week.
Crude oil inventory reports give insight into an essential metric in the oil market: supply. The crude price is influenced by supply in the market. Based on EIA's weekly inventory report, oil prices can move sharply if reported inventory numbers are widely different from the trader and analyst projections.
Crude oil commodity traders need to analyze the daily crude oil inventory reports to get a clear picture of changes in stock levels. Besides these reports, traders also need to observe the other data points like geopolitical situations, factors affecting the overall global economy, and economic policy. The OPEC controls more than half of the world's oil production. OPEC's policy direction is crucial in deciding on crude oil demand, supply, and price guidance.
Other factors guide the overall demand-supply equation, e.g., regional, political disturbances, unexpected global events like a war or pandemic that may shoot the demand to unexpected highs or lows. Seasonal factors also drive the demand and supply.
For traders, technical analysis of weekly crude inventory reports must be done simultaneously. The supply situation indicates the movement of prices upwards or downwards. While one report shows an upside in overall stocks, the other reports may give a glimpse into the consumption and bearish supply. Thus, an analyst must consult the reports together and understand other global parameters driving supply, e.g., politics, diplomatic ties, and economic policy.