Are US Oil Figures Accurate?

Supply and demand are the bread and butter of oil industry economics. Naturally, statistics and trends play a major role in influencing the marketplace. But are figures as accurate as they're made out to be?

According to the latest monthly estimates released by the Energy Information Administration, US oil demand spiked to 19.62 million barrels a day in February. This represents an increase of almost half-a-million barrels a day compared to February 2017. Or, growth of 2.4%.

Breaking down the boom

However, it's not quite that simple. The "oil" category encompasses more than just crude which means that another, less optimistic figure lies beneath the headline. While overall demand for oil spiked, US consumption of “finished petroleum products” like gasoline and diesel dropped by 189,000 barrels a day. This represents a 1.1% decline and stands in stark contrast to the 2.4% increase splashed across headlines.

So what triggered the 649,000 barrel a day oil demand increase? Hydrocarbon gas liquids like ethane and propane accounted for two thirds of the jump. As liquids they fall into the oil category, though compared to most petrochemical products they're low-value commodities.

The figures have economists concerned, especially when it comes to prices. Gasoline accounted for a huge 89% of the overall drop in demand for refined petroleum products, a price burden which could be passed on to consumers. Since OPEC and Russia spearheaded a joint venture to reign in production back in November 2016 Stateside gasoline prices have jumped from US$2.15 a gallon to roughly US$2.85.

Experts concerned oil bears could come out of hibernation

When viewed on a rolling 12-month basis, trends clearly indicate that the upsurge in US gasoline demand has been steadily flattening out for the past 18 months. It was initially fuelled by a collapse in oil prices, though since the November 2016 embargo prices have started to rise. This inevitably coincided with higher pump prices, and therefore triggered a drop-in demand. There's also concern over the risk of supply shocks, with experts warning that oil bears are currently so scarce that they could severely shake the market if they reappear.

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