Crude oil is one of the most widely traded commodities across the globe. Its prices have a major economic and political effect on a country. The prices of crude oil are governed by technical forecast, future prospects, fundamentals of a country, trends to trade, etc. The stock of crude oil is known as crude inventory.
The stock of unrefined petroleum currently held by oil producing nations at any point in time determines the crude inventory levels. The price of crude oil is determined by comparing its demand and supply with the stock held by the oil producing nations and entities. The data for crude oil inventory is published every week by counting the current oil stockpiles in comparison to the previous week.
Some of the Important Oil Inventory Data Followed Globally
- U.S. Crude Oil Inventories
- U.S. API Weekly Crude Oil Inventories
- U.S. EIA Weekly Distillates Inventories
- U.S. Gasoline Inventories
Oil Inventories Pricing
The price of crude oil is dynamic i.e. they keep changing. There is an instant adjustment in the pricing of oil depending on the supply and demand. When the oil inventories are high, the traders would check on the demand for the oil at the prevailing price and would prefer to sell their positions immediately leading to a fall in crude price. Whereas, when the oil inventories decline, it is a signal to the traders that the demand is increasing and they may take buy positions in the oil market leading to an increase in the prices of crude oil.
The U.S. Energy Information Administration (EIA) gives updates on its domestic oil inventories on weekly basis. This weekly inventory report reflects the changes in the strategic petroleum reserve in one week. Many projections are made ahead of oil inventory data release. If there is a big gap between the estimation made by the analysts and actual data, there is a dramatic reaction in the oil prices. The EIA’s weekly inventory reports also provide updates on the total stock levels in comparison to average stock in the prior years.
Oil inventories play a critical role in determining oil prices. Economies of all the countries are affected by the rise and fall in the oil price. The EIA’s weekly report on crude oil inventory is crucial for all the countries across the globe. OPEC plays the role of determining the crude oil policy based on oil prices, demand and supply. OPEC has control of producing more than half of the world’s oil production. Therefore, before taking any decisions on crude oil prices, the traders in the stock market must consider the crude oil inventory data and other factors that drive the crude oil prices.