There are two crude oil inventory reports released each week in the United States. One is from the American Petroleum Institute (API) and the other is from the U.S. Energy Information Administration (EIA). The API is a national trade association whereas the EIA is an agency of the U.S. Federal Statistical System and a part of the U.S. Department of Energy.  Of the two weekly reports, the EIA report is more highly regarded.

The weekly update on the number of crude oil inventories in the U.S. is one of the most important pieces of data regarding the oil market. Oil traders and analysts closely watch changes in inventory levels and use them in their analyses and expectations for oil prices. That's because oil inventories serve as a proxy for oil demand.

If crude oil inventories increase weekly, it indicates that demand for oil is falling short of supply. If the oil inventories data shows a decline in oil inventories, it indicates that demand is surpassing supply. With the supply and demand balance being one of the most crucial facts in a commodity's price, this inventory data has a direct impact on oil prices. Live oil prices often swing dramatically when the week-over-week change in oil inventories is significantly different from what analysts forecast.

Key Takeaways

  • The American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA) both provide weekly crude oil inventory reports.
  • Oil inventory reports are indicators of the supply and demand for oil which impacts oil prices.
  • The API is a trade association whereas the EIA is a governmental agency.

API

The API is an industry group that represents American companies involved in producing, refining, and distributing petroleum and petroleum products. Its report is available only to members and it currently has over 600 members, which consist of companies in all facets of the oil industry, from exploration and production to marketing and supply. The API was founded in 1919 and works not only in providing research but also in setting industry standards, from "drill bits to environmental protection."

Since 1929, the API has produced the Weekly Statistical Bulletin. This report contains a multitude of information, reporting on "total U.S. Crude and regional crude inventories and data related to refinery operations, as well as the production, imports, and inventories of the four major petroleum products: motor gasoline, kerosene jet fuel, distillate fuel oil, and residual fuel oil." The products listed account for more than 80% of total refinery production.

The American Petroleum Institute collects the data “at will” from members and non-members. Typically the data sent to the EIA is also sent as a duplicate to the API, utilizing the same forms. According to the API, both agencies confirm that the weekly data they receive accounts for approximately 90% of the industry. The remainder of the 10% is estimated by both agencies. The stern disclosures that the EIA data includes have led analysts and traders to believe that the EIA’s data is more accurate than the API’s.

The API data is often seen as a prelude to the EIA data, as it's released on the evening before the EIA report. There is a relationship between the two data sets. The API claims that "the monthly estimates are within 1% of each other about 81% of the time."

The Weekly Statistical Bulletin report is released every Tuesday at 4:30 p.m. Eastern Time. If the Monday before is a Federal holiday, the report is released on Wednesday.

While the data offered by the API and EIA is often similar, at times there have been large discrepancies in the two reports.

EIA

The EIA is an independent, impartial organization that "collects, analyzes, and disseminates energy information in the U.S to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment." It is the main government authority for energy statistics. Unlike the API, the EIA does not actively lobby for any policy changes.

The EIA publishes its Weekly Petroleum Status Report on Wednesdays at 10:30 a.m. Eastern Time, but after a Monday holiday, it is released on Thursday. The EIA report provides information on the supply of oil and the level of inventories of crude oil and refined products. The report contains many different sections on many different products broken down by regions, prices, estimates, and stocks.

The EIA requires major oil companies to complete their oil inventory surveys and includes a stern disclosure for noncompliance or intentional wrongdoing, and there are civil penalties for failure to file accurate and timely data.