Keeping Watch On The Oil Markets

Oil has been on a price rise since the commencement of 2021. Crude oil opened the year at $48.40 per barrel with the bullish run continuing for most of the year till the writing of this article. The prices skyrocketed towards $85.40 per barrel on October 25, 2021, the highest since November 2014. With the 76% incline in prices in the current year, traders and analysts have been scurrying for information that will assist their trading strategies. Apart from impromptu news that has driven the market fundamentals, this article is an attempt to decode the weekly and monthly market reports that have had a stranglehold on the markets since time immemorial.

International Energy Agency Oil Market Report

The International Energy Agency’s (IEA) Oil Market Report has been described as one of the world’s most authoritative and timely sources of data, forecast and analysis on the oil market on a global scale. It includes detailed statistics and commentary on oil demand, supply, inventory, price and refining activities. The published information is divided into OECD and non-OECD economies. The report is an important source of information for government statistics from all the countries included releasing both historical datasets and supply and demand forecasts for the upcoming year. The report reflects all the data significant to perform in-depth analysis and developments in the oil markets identifying trends in the production, consumption, refining, inventories in the OECD economies, and prices for both crude and other products. The IEA report is released very close to the monthly OPEC report. Traders and analysts look at both the reports in tandem, providing checks and balances for the other. The report is deemed to be unbiased owing to the low ranking of France in terms of oil production. The schedule of the release of this report is transparent and is announced on the IEA’s website well beforehand. The next two months release of the reports are scheduled for December 14, 2021 and January 19, 2022 at 10 am (Paris Time) which translates to 2:45 pm (Nepal Standard Time).

OPEC Monthly Oil Market Report

This monthly report by OPEC includes important issues driving the global oil market and also provides an outlook for market developments for the ensuing year. The report reflects a detailed analysis of the key developments impacting the oil market trends in regard to demand and supply. This report is released monthly between the 12 and 17 of each month and in recent times has taken a muted level of significance due to the lowering US supply in the global oil markets. OPEC is a renowned body for oil-producing nations and the adherence with their production quotas is apparently the most vital part of the report as their demand projections tend to reflect unusual strength as compared to other independent analysis. The next release of the report is scheduled for December 13.

EIA Weekly Oil Report

As compared to the previous two listed reports, the US Energy Information Administration (EIA) is a weekly report published every Wednesday. It includes numbers related to the weekly changes in the number of barrels of commercial crude oil held by various US firms. The level of inventory changes reflects on the price of the oil products. If the incline in the crude inventories is more than expected and more than the previous week’s numbers, it denotes weaker demand driving the prices downwards. However, if there is a decline in crude inventories or is less than expected then it suggests hawkish demand driving the prices to the bullish territory. The initial moves from the EIA report can be large but can reverse quickly and with wider trading ranges. The EIA report is released every Wednesday at 9:15 pm (Nepal Standard Time) and is the only weekly report that traders keep an eye on immediate changes in the inventories likely influencing the prices.

Conclusion

Crude oil is driven mostly by the market fundamentals of demand and supply. However, the dynamics can change based on the equation driving the prices to move in a volatile manner. Keeping a watch on the above three reports may not be the be-all and end-all but a trader can clear relevant doubts in regards to the upcoming trend in the oil markets.