Prices for crude oil, crude oil products and natural gas futures constantly change in response to new information and reflect the adjustments being made to previous and prospective expectations. The relative size and duration of those adjustments often depend on the nature of the new information and the way it is received. Unanticipated new information quite often induces extreme price volatility creating a price shock. For example, the 1973 oil embargo by OPEC members caused oil prices to spike to historical highs.

New information regularly disseminated to the market also induces price volatility, which can range from barely noticeable to extreme because even though the information is anticipated, its content may not be in line with the market's expectations. This is particularly true of the data periodically released on oil, petroleum products and natural gas inventories. Here we'll cover where the information for this industry comes from and when to expect it.

Where the Data Comes From
Weekly oil and natural gas supply data is published by the Energy Information Administration (EIA), an independent agency of the United States Department of Energy. In fulfilling its responsibility as policy advisor to the Department of Energy, the EIA's job is to objectively collect, interpret and analyze all energy-related data.

The EIA schedules the weekly publication of data highlighting U.S. crude oil and petroleum products inventory levels each Wednesday through two separate reports. The first, called the Weekly Petroleum Status Report is distributed mid-morning and features raw inventory data along with recent commodity and product spot and futures prices. The second report, This Week In Petroleum, is available later in the afternoon. In addition to more extensive data points, this report includes commentary by the EIA about the most recent data.

The EIA makes its report on U.S. natural gas storage levels available each Thursday. Similar to its oil reports, it also releases two separate reports; the Weekly Natural Gas Storage Report is released mid-morning in the form of a much smaller "flash" report. It's similar to its crude oil counterpart in that only the raw storage data is included. Additional data points and the EIA's detailed analysis of the morning data is published in the Natural Gas Weekly Update in the afternoon.

These reports are available at no cost and can be received by email automatically each week once you sign up at the EIA's website.

Like the Energy Information Administration, the International Energy Agency (IEA) serves as the energy policy advisor to the 26 countries comprising the Organization of Economic and Cooperative Development (OECD). Also like the EIA, it collects, interprets and analyzes data related to energy. However, unlike its U.S. counterpart, the IEA's data relates to global crude oil supply and is released with the publication of the monthly Oil Market Report. Data presented each month is given a detailed analysis and provides a perspective for the IEA's updated crude oil price outlook, which is also included in the report. A paid subscription is required to receive the current report when published.

Crude Oil Inventories
Crude oil is the primary refinery input; therefore, any changes in the level of crude oil inventories from one reporting period to another not only impact the price of their underlying futures contracts, but will also affect the price of underlying futures contracts of associated refined products like gasoline. The petroleum inventory data showing the level of U.S. crude oil inventories first highlights the portion of current inventory produced within the U.S. then it highlights additional data indicating the portion of total crude oil inventory that was imported.

More specifically, U.S. petroleum product inventory data pertains to the level of refined products, such as motor gasoline, jet fuel, distillate fuel oil (source of diesel fuel) and residual fuel oil that are readily available. Like crude oil inventories, petroleum product inventories data also identifies the portion that is the result of imports. In addition to the impact on refined product futures prices caused by both changes in crude oil and refined product inventories, volatility in refined product futures prices can also be attributed to changes in the portion of total inventories that has been imported. Underlying contract price volatility is likely to increase upon evidence suggesting that the proportion of imported refined product to total inventories is increasing.

Natural Gas Data
Published natural gas inventory, or "storage," refers to the network of more than 400 locations throughout the contiguous 48 states. It is designed to highlight the volume of natural gas that can be readily delivered to natural gas consumers, principally in the U.S. This includes power generation plants, industrial and commercial users, and households. Like crude oil and petroleum product inventories, natural gas storage data provides a look at absolute levels as of the reporting date as well as changes to those levels from prior periods. However, unlike crude oil and petroleum product inventories, owing to characteristics that largely prevent it from being transported over particularly long distances, storage level data represents natural gas coming only from U.S. production efforts.

The Effect on Oil and Natural Gas Futures Prices
Information concerning crude oil and natural gas supply levels will affect the price of underlying futures contracts as the market undergoes a process of reconciling and adjusting past expectations, as well as readying new ones based on the most recently reported data. Moreover, the extent to which some or all of the actual data departs from expectations is manifested by the degree of resulting price volatility. For example, energy future prices tend to rise following an inventory report that indicates that gasoline inventories remained unchanged, whereas analyst prediction may have expected that inventory to rise.

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