| NEW YORK
NEW YORK Oct 14 When the U.S. Energy
Information Administration turned off the lights on Friday due
to the government shutdown, energy traders' view of the world's
biggest oil market suddenly dimmed significantly - but it won't
fade to black.
Next week, for the first time since it was started in 1979,
the EIA's weekly report on the production, use and inventory of
fuel and crude - the single most closely watched set of data in
the global oil market - will not be published. After operating
on rainy day funds since the Oct. 1 partial government closure,
the agency has finally run out of money, forcing it to shut.
The EIA's U.S. natural gas inventory data, typically
released a day later, will also be absent. If the shutdown drags
on, there will be none of the more exhaustive monthly data that
usually underpins many an analyst's spreadsheet.
In an official sense, the world's biggest and most
transparent oil market will become more opaque than China, the
country that has just overtaken the United States as the biggest
net importer of oil. From Beijing, only broad monthly data on
refinery production and trade is available.
"It is unconscionable that we are making this market less
transparent, it is already opaque," said Jan Stuart, head of
Global Energy Research of Credit Suisse. "It's crazy."
But as with other financial markets that have already
muddled through two weeks of data darkness, oil traders will
find a host of private enterprises eager to help fill the
information void, highlighting the rapid growth of proprietary
intelligence providers seeking to get a jump on official data.
These firms are on a marketing spree to fill the gap,
offering products temporarily to entice new clients. Data such
as gasoline imports and stockpiles in Cushing, Oklahoma -
normally available ahead of the official figures for a sizeable
fee - will be released for free in the weeks ahead.
But none of them offer a suite of products that match the
exhaustive set of data distributed by the EIA, based on
information that oil and gas companies are required to provide
the U.S. government.
Analysts say speculators, fearing that they may put on
positions that could be proved horribly mistaken when the EIA
data is released again, will reduce positions in the market.
But no one can say for sure - the Commodity Futures Trading
Commission has stopped producing a weekly report that normally
details speculator activity.
HUNTING, GATHERING, AND MASSAGING
Collecting the weekly oil inventory data is a major task
undertaken by up to five EIA analysts and 20 contractors during
any given week. The weekly data samples 90 percent of the oil
inventory volume held by 70 to 80 top oil companies as reported
in the EIA's monthly data.
Operators have until 5 p.m. on Monday to submit their forms
covering their operations during that week either through email,
a business-to-business system not linked to the Internet or via
fax. Dozens of data points are collected through series of forms
that differ by operator.
As the data comes in, the team inspects it for anomalies and
corresponds with companies to correct errors or validate figures
that their system flags. They then discuss it, use ratios to
"gross up" the sample in order for it to reflect more than just
90 percent of the volume and put it in the system for
publication at 10:30 a.m. EDT on Wednesday.
The EIA sent a letter to operators on Friday afternoon,
asking them to continue to submit data despite the shutdown. The
agency will not, however, be able to communicate with those
operators if there are any problems with the data submission,
nor is it clear when the data will be released once the shutdown
"We are not making any decisions yet on when we will resume
the release," said Douglas MacIntyre, director of the EIA's
office of petroleum and biofuels statistics.
While there is no viable substitute for much government data
that depends on proprietary data, which is impossible to
replicate such as non-farm payrolls and industrial output, the
oil market does have a fall-back: the industry-funded American
The API report, which is based on voluntary submissions
covering the same type of data that the EIA collects, is
typically released at 4:30 p.m. a day ahead of the EIA report,
but has often been criticized for being less accurate.
In the absence of an EIA benchmark, however, the API's
weekly report, which started in 1929, will take on more
prominence. Some traders said the group's decision earlier this
year to begin charging users a premium rate for real-time access
to the report seemed well-timed.
"They're going to be the only game in town," said Phil
Flynn, analyst at Price Futures Group in Chicago.
There is no equivalent to the API for natural gas. The
American Gas Association produced a weekly storage report from
1994 to 2001, but discontinued it due to "resource
considerations" and has no plans to resurrect it.
"Traders will look for substitutes from private data
providers," said Tom Saal, senior vice president at INTL FCStone
in Miami, adding: "Privately-produced data does not capture the
entire market. Not everyone has access to that data, so I don't
expect to see a lot of volatility in prices."
INTO THE SPOTLIGHT
Over the years, a handful of private companies have also
unveiled products to either pre-empt the EIA's reports or to
provide more accurate data, focusing on deep niche data rather
than breadth. With the U.S. oil market in the midst of an
unprecedented boom, the appetite for data has only grown as
traders and analysts look for an edge in explaining how trade
flows are adjusting to cope with new production.
"We have definitely seen increased demand for our products
over the past two years, and it's accelerated even more in the
past couple days," said David Francoeur, Chief Marketing Officer
for energy intelligence provider Genscape, which uses infrared
cameras, helicopter fly-overs and other observational analytics
to calculate data on inventory levels at key oil hubs,
refineries and in pipelines.
Among the data it offers, Genscape monitors tank levels at
the most closely watched oil hubs, including the Cushing,
Oklahoma, delivery point for the U.S. oil futures. Next week,
the company plans to release its Monday morning Cushing
inventory number to the market on Thursday.
Clipper Data, a firm that uses customs data and ship
tracking to estimate seaborne imports of crude and products,
will also be releasing a report on U.S. oil import data for the
East Coast, Gulf Coast and West Coast on Tuesday.
"The pipeline and infrastructure reporting services like
Genscape, their data will become all the more important and
we're just going to have to more closely monitor, on our own,
refinery snags or slowdowns," said John Kilduff, partner at
Again Capital LLC in New York.
"It all just got a bit harder."
(Additional reporting by Joseph Silha, Eileen Houlihan, Anna
Sussman and Jeanine Prezioso; Editing by Ken Wills)