EAI and API can’t get their numbers together??

[James Regan + 1,776]

If the EIA and API can’t get their numbers even close on a monthly or weekly basis how can they be used as a credible source for oil traders?

Every report from both bodies are always started with “surprise” or “ unexpected”. The main issue for myself is that each of the two bodies dominate the headlines with their numbers, and as a result the price of oil acts accordingly.

”Surely (or obviously not) in this day and age we should have got a method or algorithm which would not surprise or deliver unexpected data that is produced weekly or monthly which affects the markets so drastically??

[wrs + 893]

There are oil storage depots all over the country and it's my understanding that the information isn't from measurements but from a poll of the operators of the storage facilities.  There is one outfit that I know takes pictures of the tanks from the air and analyzes the change in levels of the tops to determine the totals.  They might be more accurate than EIA and API but they are a subscription service.  Oil trading is just noise, it's not interested in setting a real market price but rather in creating a volatile trading index to play a zero sum game with.  Don't bother with it unless you like losing money or you can figure out your own system for trading.

I use USO as a trading vehicle and watch the gaps there.  We still have a gap back at $10.11 which amounts to a WTI move to $47 if it fills.  The gap at $10.50 is now filled.  The continuous contract on WTI isn't useful because it's gamed regularly overnight in the low volume hours.  No matter how much is written about it, oil is not a transparent market and so it's susceptible to gaming.  When there is a real shortage we will know it but for now, no such supply shortage exists.  I am amazed that production continues to increase even with the rig count continuing to drop since the beginning of the year.  Eventually that has to kick in but so far it doesn't matter.  Guess there are a lot of DUCs or else wells that are not being fully produced.  I know that's what XTO is doing with the wells they drilled on my section last year, they are modulating the output of the 8 wells they currently have producing.

Edited June 12, 2019 by wrs

[James Regan + 1,776]

19 minutes ago, wrs said:

There are oil storage depots all over the country and it's my understanding that the information isn't from measurements but from a poll of the operators of the storage facilities.  There is one outfit that I know takes pictures of the tanks from the air and analyzes the change in levels of the tops to determine the totals.  They might be more accurate than EIA and API but they are a subscription service.  Oil trading is just noise, it's not interested in setting a real market price but rather in creating a volatile trading index to play a zero sum game with.  Don't bother with it unless you like losing money or you can figure out your own system for trading.

I use USO as a trading vehicle and watch the gaps there.  We still have a gap back at $10.11 which amounts to a WTI move to $47 if it fills.  The gap at $10.50 is now filled.  The continuous contract on WTI isn't useful because it's gamed regularly overnight in the low volume hours.  No matter how much is written about it, oil is not a transparent market and so it's susceptible to gaming.  When there is a real shortage we will know it but for now, no such supply shortage exists.  I am amazed that production continues to increase even with the rig count continuing to drop since the beginning of the year.  Eventually that has to kick in but so far it doesn't matter.  Guess there are a lot of DUCs or else wells that are not being fully produced.  I know that's what XTO is doing with the wells they drilled on my section last year, they are modulating the output of the 8 wells they currently have producing.

@wrs I just spent 10 mins typing on my phone and then my wee man decided to take the phone out of my hand and deleted my reply, maybe that’s what’s going on at API and EIA 👶 😂.

When we look at the tech required to procure prospects, drill, produce and the small issue of logistics in getting the product to the refinery surely the actual tallies of the product should not be so hard to get and accurate count, it shouldn’t be a issue that rocks the world oil markets be it from Tight Oil, conventional or “unconventional”.

I agree 100% with you regarding transparency, I guess we have to realize we are dealing with “cartels” by definition-  

A cartel is a group of apparently independent producers whose goal is to increase their collective profits by means of price fixing, limiting supply, or other restrictive practices. Cartels typically control selling prices, but some are organized to force down the prices of purchased inputs.

So if we can’t count the end product correctly then there is a lot of room for skullduggery which is unfortunate in an industry where the man at the coal face is under scrutiny and due diligence to the point of being put in front of a judge.

However we accept to do all the hard work and have the final stage left open to be manipulated by a text or a tweet which then in return has an adverse affect on the prime movers who produce the product.

I have probably summed up the oil business or El Chapos business although Guzman is in Jail.

🤔🤔

[wrs + 893]

Even the experts are confused about the EIA report because it makes little to no sense at all.

 

https://twitter.com/HFI_Research/status/1138817641714409472

[Ward Smith + 6,615]

6 hours ago, wrs said:

No matter how much is written about it, oil is not a transparent market and so it's susceptible to gaming.

This, a thousand times this. A lot of people might not remember the Hunt brothers manipulating the silver market. They took the fall, but the real story was even more convoluted. 

Back in the day, they were convinced that the dollar was becoming worthless and it was illegal for Americans to own gold then. So they bought the next best thing, silver. As you'd said, it's a zero sum game and the silver market has been manipulated forever, but Bunker and Herbert really screwed it up, because not only did they buy AND KEEP all the silver they could on the spot market (shipping it in special cargo jets to Switzerland), they wanted more, so they bought all the Futures contracts they could, also fully expecting delivery of those 20,000 ounces upon expiration.

No one had ever done that before. Nymex was illegally carrying contracts for many times the physical supply, which after all was merely notional to average traders who wanted no part of physically receiving 20,000 ounces on their doorstep. The closer the Hunts came to physical delivery, the worse it got for Nymex, who couldn't possibly "make good" on the trades they sold. That's when they sicced Uncle Sam on the Hunts. The story you'll read in Aunt Wikipedia isn't exactly going to line up and Nymex and the other COUNTERPARTIES all got away Scott free, while also pocketing a good chunk of the Hunt fortune. 

Now let's compare to oil. Hedge funds are buying and selling oil futures, and you know damn good and well, they have Zero interest in receiving the product. They're just there to "make a market" and many many times the physical volume of WTI gets sold all the time. If someone came along demanding delivery… well the bought and paid politicians will rescue Wall Street naturally. 

[wrs + 893]

I have seen the front month which far exceeds the storage capacity of Cushing, turn over multiple times in a day.  It's just numbers on a screen.

[ronwagn + 6,290]

8 hours ago, wrs said:

There are oil storage depots all over the country and it's my understanding that the information isn't from measurements but from a poll of the operators of the storage facilities.  There is one outfit that I know takes pictures of the tanks from the air and analyzes the change in levels of the tops to determine the totals.  They might be more accurate than EIA and API but they are a subscription service.  Oil trading is just noise, it's not interested in setting a real market price but rather in creating a volatile trading index to play a zero sum game with.  Don't bother with it unless you like losing money or you can figure out your own system for trading.

I use USO as a trading vehicle and watch the gaps there.  We still have a gap back at $10.11 which amounts to a WTI move to $47 if it fills.  The gap at $10.50 is now filled.  The continuous contract on WTI isn't useful because it's gamed regularly overnight in the low volume hours.  No matter how much is written about it, oil is not a transparent market and so it's susceptible to gaming.  When there is a real shortage we will know it but for now, no such supply shortage exists.  I am amazed that production continues to increase even with the rig count continuing to drop since the beginning of the year.  Eventually that has to kick in but so far it doesn't matter.  Guess there are a lot of DUCs or else wells that are not being fully produced.  I know that's what XTO is doing with the wells they drilled on my section last year, they are modulating the output of the 8 wells they currently have producing.

So those who get the best information first can make a ton of money investing. Those with the worst information can lose the most. Right? How big of a cabal benefits?

Edited June 12, 2019 by ronwagn

[Douglas Buckland + 6,308]

James,

You need to be careful, VERY careful. Some commenters are also secret Title Police and will shred your post simply due to the EAI (versus EIA) in the title....

wrs commented that a certain storage outfit takes aerial photos of tanks to calculate volumes from the floating tops. You can do this of course, but wouldn't it be simpler just to put a pressure gauge at the bottom of the tank? If you know the density of the fluid in the tank it is an easy calculation to get the height and therefore the volume. Sure, there would be some pressure effect from the floating top itself, but that could be taken into account. 

This really isn't rocket science and not knowing the storage, at any given time, in tanks, pipelines or at sea is inexcusable.

[James Regan + 1,776]

3 hours ago, Douglas Buckland said:

James,

You need to be careful, VERY careful. Some commenters are also secret Title Police and will shred your post simply due to the EAI (versus EIA) in the title....

wrs commented that a certain storage outfit takes aerial photos of tanks to calculate volumes from the floating tops. You can do this of course, but wouldn't it be simpler just to put a pressure gauge at the bottom of the tank? If you know the density of the fluid in the tank it is an easy calculation to get the height and therefore the volume. Sure, there would be some pressure effect from the floating top itself, but that could be taken into account. 

This really isn't rocket science and not knowing the storage, at any given time, in tanks, pipelines or at sea is inexcusable.

Yes your correct , “wars have been started for less”