EIA crude oil inventories preview: Can we trust the forecasts?

Commodities

Yesterday’s API oil inventories report showed a massive build, even though a draw had been expected. Forecasts for today’s US EIA crude oil inventories also predict a drop – how accurate are these predictions?

Crude oil, Brent oil drop after API data shows huge build

Yesterday’s crude oil stock change report from the American Petroleum Institute was expected to show that inventories fell by 1.7 million barrels in the week ending June 5th. Instead, stocks rose nearly 8.5 million barrels.

Oil fell further from the three-month highs hit on Monday on the back of the data. Today crude oil is currently down -$0.38 to trade around $38.12, while Brent oil is trending at $40.46 after falling -$0.29. This is partly due to the API data, but also because of expectations OPEC will not extend the record level of production cuts beyond July.

Candlestick price charts of spot crude oil and spot Brent oil

Will EIA data confirm huge stockpile build?

The Energy Information Administration releases its official crude oil inventories report later today. Forecasts were for a draw of over two million barrels, although in light of the API data this seems unlikely.

In fact, over the past five weeks forecasts for EIA data have been significantly wrong. On average, the forecast has been out by around 5 million barrels. In the past four weeks, forecasters have got the direction of inventory stocks wrong, predicting a build when in fact stocks fell, or vice versa.

Table: EIA crude oil inventories forecasts vs actual

Release Date

Actual

Forecast

Difference

Jun 03, 2020

-2.077M 3.038M

5.115M

May 28, 2020

7.928M -1.944M

9.872M

May 20, 2020

-4.983M 1.151M

6.134M

May 13, 2020

-0.745M 4.147M

4.892M

May 06, 2020

4.590M

7.759M

3.169M

 

Meanwhile, for the past three weeks, the API data and the EIA crude oil inventories report have both shown stockpiles moving in the same direction.

For the week commencing May 25th, the API data showed a build of 8.7 million barrels – under a million barrels above the EIA print.

For the week beginning May 18th, the API numbers were just 183,000 barrels below the EIA’s reported draw of -4.983 million.