The Investment Gems Buried in the EIA’s Data

Strange things are afoot at the Energy Information Administration.

It’s been an eerie feeling that our investment community has had for years. 

In the past, it was a gut feeling that we weren’t being given accurate information, yet it was only over the last few years that that uncanny feeling grew too large to ignore. 

Again, this is old news, isn’t it? 

We’ve grown accustomed to being fed this kind of information. 

Recently, we talked about the shadiness that has surrounded the oil industry for decades — how cheating among OPEC quotas has become a running joke amongst analysts as well as the preposterous oil predictions the mainstream media latch on to for clicks.  

However, we've had legitimate concerns over the EIA's reporting accuracy. Now, to be clear, we certainly don’t hold any grudge against the EIA. 

But there’s far more room for error when your numbers are given to you by a bunch of nerds in the U.S. Census Bureau — people who probably don’t know the difference between shale oil and oil shale. 

Mind you, there’s no nefarious plot in the EIA to fudge its numbers. In fact, the EIA is used to going back to make any necessary revisions to get it right… even if it IS months later and slipped quietly into its reports. 

I told you two weeks ago that I’d reveal an oil story buried in the EIA’s data, and here it is… 

The Investment Buried in the EIA’s Data

This week, the EIA reported a monster inventory build of 16.3 million barrels of crude oil in the United States. 

But it wasn’t the sizable stockpile build that you should focus on. After all, we’re in the weakest season of the year for oil, when inventories should be building. 

This is the time of year when refineries are in maintenance mode.

Take a look and see if you can spot it yourself in the EIA’s report:

Did you spot the massive adjustment higher of 1.967 million barrels per day in crude supplies? 

Go ahead and take another look quickly; I’ll wait. 

Keep in mind that’s per day, which comes to a nearly 14 million-barrel adjustment for the week. 

The adjustment is essentially the difference between supply and disposition. EIA Administrator Joe DeCarolis pointed out at the end of last November that there has been a rise in the adjustment over time in the EIA’s monthly data:

So why are they getting it so wrong?

Moreover, this situation has caused a bit of introspection over at the EIA. In fact, the administration is currently investigating whether or not it'll have to change its methodologies completely. 

It looks like one of three things could be going on here.

First, the EIA could just be given bogus data to begin with. I say this not suggesting that it's intentionally fed wrong numbers, but errors and misclassifications can happen.

The second is that crude oil is not being accurately captured by EIA surveys. 

The third potential excuse is that the EIA might be underestimating U.S. domestic production. 

You know just as well as I do where most of our crude oil production comes from, right? 

Nearly half of every drop of oil produced within the United States comes from an area that’s just 250 miles wide and 300 miles long. 

And that’s where you’ll find the best oil stocks drilling in more than 7,000 oil fields. 

Take a look for yourself.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

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