What To Look For In Tomorrow’s EIA Crude Oil Inventories Data

There has been a lot of media coverage on the recent cyberattack on the Colonial pipeline in the US.

So, it’s understandable there will be a lot more attention on the release of the weekly EIA petroleum data tomorrow. Not just because it has an impact on crude prices, but also because it affects a wide range of stocks and potentially even the currency itself.

The media likes to speculate about all the potential geopolitical implications and spin up the danger posed. Therefore, it’s important not to get ahead of ourselves.

This is not the first time the pipeline has been shut down. In fact, as recently as 2016, the pipeline was shut for over 10 days due to a spill that needed repairing.

Although that led to some disruptions and price increases at the pump in the southeast USA, there was no major crash.

This time it’s different

Of course, in the aftermath of the pandemic, markets are a little more jittery. And there is potential for higher energy costs being a drag on an important economic area.

So, if we want to use the EIA inventories as a guide to see what’s going on in the crude market given the somewhat unique circumstances, here’s what to keep in mind.

The issue with the pipeline is that it transports refined fuels from the Gulf to the East Coast. So, the problem isn’t how much crude is available, but how many refined products there are.

Particularly gasoline, diesel, and jet fuel (Delta Airlines has their main hub in Atlanta, Georgia, which is supplied by the pipeline).

Cutting through the numbers

We want to be paying attention to the gasoline inventories section of the report.

The US had, as of last week, enough gasoline to last 28 days. However, it’s not distributed evenly across the country. The East Coast has the bulk of blending components to make gasoline.

But, the bulk of finished gasoline is on the Gulf Coast. Jet fuel has a similar situation, with about a third on the East Coast. (One of the reasons for American Airlines already announcing they will be making refueling stops for their trans-Atlantic flights.)

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