A private survey by the American Petroleum Institute (API) found a larger drop in crude oil inventory than expected. Analysts predicted a decrease of 1 million barrels, alongside an increase of 1 million barrels in distillates and 0.6 million barrels in gasoline stocks. This survey gathers data from various oil storage facilities and companies. The official government report from the US Energy Information Administration (EIA), which is more reliable, is due on Wednesday.

EIA Versus API Reporting

The EIA report compiles data from the Department of Energy and other agencies. While the API report focuses on total crude oil storage, the EIA report includes data on refinery inputs, outputs, and different grades of crude oil. These reports differ in depth and accuracy; the EIA report offers a clearer picture of the oil market. Both provide valuable information on the current state and trends of the oil industry, helping analysts and market participants make informed decisions. When you look at these stockpile figures, there’s a noticeable difference between what was expected and what actually happened with oil volumes. The private report highlighted a more significant drop in crude than predicted, while distillates and gasoline exceeded forecasts. Changes in inventory often indicate shifts in demand or supply, which can affect prices. A larger-than-expected drop in crude stock usually points to stronger demand or slower supply. This aligns with recent market trends suggesting increased refining activity, especially as summer driving approaches in the Northern Hemisphere. If demand is being underestimated or if there is an unreported supply disruption, recent price levels may not reflect this reality, potentially increasing volatility. Official data typically elicits more structured responses due to its reliability and deeper insights into refined products and regional imbalances. Traders often wait for this information to validate or contest initial readings, meaning reactions to private figures may change based on government data.

Impact of Discrepancies

In the past, significant differences between the two reports have led to position adjustments, particularly when speculative bets are high. Given the changes in distillates and gasoline, this week might prompt fresh positioning in crack spreads and fuel derivatives, especially related to summer transport trends or minor export flows. The evidence suggests a need for re-pricing of deliverable contracts and roll strategies. Any gap between expectations and confirmed data could drive activity in near-term futures, especially if refining margins change. This may lead traders to shift towards more defensive contracts to hedge against volatility between product inventories and crude. Watch the refinery utilization rates—if they are higher than expected, it could indicate proactive product generation in response to export demands or regional shortages. There’s been notable refiner interest along the Gulf Coast and rising demand from parts of Southeast Asia. This could create a more globally linked price impulse, especially with high shipping rates. For now, we recommend using the current volatility to reassess risk. Market participants might prefer spreading risk across various product grades or delivery times, which could widen calendar spreads if discrepancies are confirmed on Wednesday. This may also shift focus to storage economics and regional backwardation, which are important for near-term hedging and arbitrage strategies. We anticipate position adjustments by mid-week. If energy futures react sharply, it signals a good time to refine exposure or reconsider strategies based on outdated trends. Create your live VT Markets account and start trading now.

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