What are the American oil stocks?
The American oil stock figures are data that is updated each week by the Energy Information Agency of the United States. The stocks referred to here are those that can be found in the American companies that use this commodity and therefore make major purchases.
You can find out the level of these stocks each week using the economic calendar, as well as the stocks of petrol and distillates. It is the API that is responsible for this weekly publication and you can access an economic calendar from any professional online trading platform.
How do the oil stocks work in the United States?
The American oil stock figures are completed in a weekly basis, by the IEA, International Energy Agency, an autonomous intergovernmental organisation. This organisation details the crude oil stocks accumulated by American companies.
It is another organisation, the API or American Petroleum Institute, that is responsible for the official publication of oil stocks figures, completed every week, generally the Wednesday or Thursday, at the same time as those for the stocks of fuel and distillates. The figures for the American oil stocks are entered into the economic calendar that you can find online but which is also available through all the CFD brokers.
The influence of American oil stocks on the price per barrel:
The publication of the American oil stock figures has a major importance for the analysis of the petroleum market and the anticipation of price movements. In fact, the businesses accumulate their oil stocks in accordance with their requirements. It is therefore clear that these stocks diminish according to economic activity and therefore demand increases. On the contrary, stocks that increase are often the sign of a weak demand.
Moreover, when the stock volume falls, businesses tend to purchase more oil in order to replenish their stocks rapidly which may often lead to a rise in the price particularly over the short term. To the contrary, major stocks encourage buyers to reduce their orders so leading to a fall in the price per barrel.
How to interpret reports on the American oil reserves?
Knowing and understanding the levels of the American oil reserves is one thing but being able to interpret them is something else. In fact, the figures published cannot by themselves provide you with reliable signals and should therefore be carefully interpreted.
A correct interpretation of these reserves should in fact take into account other significant factors such as the state of the economy, the data relating to global production or supply and demand. It is therefore important to know the market well to understand the impact such reserves can exert on the price of oil.
We would also note here that the market can also anticipate this type of publication. Taking this into account can be decisive in your analysis. There again, a thorough knowledge of the oil market and its typical reactions to this type of data is clearly advantageous.
How and by whom are US crude oil stocks measured?
It is also interesting to know how US crude oil inventories are measured in order to understand their impact on the price of crude. In reality, the level of crude oil inventories is measured as a change in the number of barrels held by commercial companies that are based in the US.
This indicator is published weekly as part of a larger weekly survey called the Weekly Petroleum Report. This is of course published by an agency of the US federal government. Specifically, as mentioned above, it is the US Energy Information Administration.
This federal agency was created in 1974 under the aegis of the Federal Energy Administration Act and its objective was to increase and rationalise the amount of information relating to the energy market. It should be remembered that at that time the United States was operating in the context of the oil crises of the 1970s.
Specifically, the Weekly Petroleum Report provides weekly information and data on the number of barrels of crude oil entering US refineries and the number of barrels of oil imported into the US during the previous week. The change in inventories held by the companies concerned is also systematically compared with the levels of the previous year. You can therefore see this data in the economic calendar or in the weekly stock report, in addition to the figures for the actual stocks held by these US companies.
As we have seen in this article, the level of these US crude oil stocks has a direct influence on the oil price. But that is not all! Indeed, the level of weekly crude oil stocks in the US also influences the price of oil products traded daily on the various markets around the world. This price can thus also influence inflation and thus also have an influence on possible future decisions of the US Federal Reserve or FED regarding interest rates.
For example, it is often seen that a significant drop in US stocks tends to push the US dollar up. So there is a correlation between these two values.