Crude Oil Prices Drop Following Unexpected Data from Biden's Department of Energy

The Biden administration's Department of Energy recently released its weekly Energy Information Administration (EIA) oil storage report. This report was unexpectedly different from the private American Petroleum Institute (API) report released the day before, causing a stir in the energy market.

Contrasting Reports

The API report indicated a reduction in various energy stocks over the past week. Crude oil saw a decrease of 2.8 million barrels, marking the ninth weekly draw in the past ten weeks. This was significantly lower than the estimated build of 1.0 million barrels. Gasoline stocks decreased by 0.5 million barrels, and distillates increased by 0.2 million barrels. Cushing stocks saw a significant decrease of 2.6 million barrels, the largest weekly drain since August 18, 2023. This pushed oil in Cushing storage to critically low levels.

Department of Energy's Data

In contrast, the Department of Energy's EIA report indicated an increase in stocks across the board. Crude oil stocks rose by 833,000 barrels, narrowly missing the estimated 1.05 million barrels. This was significantly different from the 2.6 million barrel draw reported by the API. Gasoline stocks increased by 2.31 million barrels, and distillates increased by 2.308 million barrels. Cushing stocks decreased by 1.704 million barrels, marking the ninth draw in the past ten weeks.

Impact on the Market

The unexpected increase in stocks led to a small gain in total crude inventory, excluding the Strategic Petroleum Reserve (SPR), after hitting a one-year low. The Biden administration added just 279,000 barrels to the SPR in the past week, the lowest weekly addition this year. This was a significant change from the previous week's 1.8 million barrel increase, which was the largest increase since June 2020. Despite the lower draw in Cushing stocks reported by the EIA compared to the API, a few more weeks of this trend could still lead to critically low levels. However, there is still some time before Cushing hits bottom. Until then, commodity trading advisors and short sellers are in control. Following the release of the EIA report, oil prices fell significantly, nearing the lowest level since 2021.

Bottom Line

The contrasting data from the API and the EIA has led to uncertainty and volatility in the energy market. It raises questions about the accuracy and reliability of these reports, and their impact on market trends and prices. What are your thoughts on this issue? Do you think these discrepancies could have a long-term impact on the energy market? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.