Thursday, June 11, 2015

Where Are the Missing Barrels? "Oil Data Not Keeping Up as Market Adjusts to Low Prices"

The market is, as the old-timers used to say, well supplied.
(get it?)

From MarketBeat:
In today’s oil market, even the data providers are frustrated with the data.

Market watchers have become obsessed in recent weeks with “missing barrels,” or the idea that total supply-and-demand figures from forecasting agencies show that the market is more oversupplied than market behavior suggests. Some say the physical market is actually better balanced than the data show, either because production is lower than reported or demand is stronger.

In its monthly report released today, the International Energy Agency – whose forecasting reports are the most widely followed by energy traders – acknowledged that this might be the case.

“Statistics…have a poor track record of capturing rapid market changes, as the statistical process often entails adjustments and extrapolations from recent trends, which naturally tend to assume business as usual,” the agency said. “Current markets could thus be tighter than reflected in recent data.”

One major problem is that drilling technology and behavior has quickly adapted to low prices, making production more efficient and cheaper than it was last year or even last quarter. This is especially true in the U.S., where shale-drilling technology is only a few years old....MORE