Notes on Stocks Data
1 May 2007
Some explanations on oil stocks, levels and changes
In the Joint Oil Data Exercise questionnaire, the current definition agreed on by all organizations was voluntarily kept simple; however, since several questions were asked by participants, some clarifications regarding stocks need to be given.
Definition currently in the Joint Oil Data Exercise questionnaire:
Represents the primary stocks level at the end of the month within national territories; includes stocks held by importers, refiners, stock holding organisations and governments
Closing minus opening level
Positive number corresponds to stock build, negative number corresponds to stock draw.
Why are data on stocks important ?
Oil stocks are a critical element of information in an oil balance. The majority of oil stocks are essential to keep the global supply system operating. They are oil in pipelines going from the wellhead production sites to refineries, from refineries to consumers; they are held in tankers, railcars and road tankers linking production sites, refineries and consumers.
Not to include stock data in an oil balance leads to a lack of transparency in the market. The trend in stocks is important for many oil analysts when making an evaluation of the oil market situation.
Stocks are a leading indicator of prices: the level of oil stocks often determines the price, e.g. when oil stocks are low it means that there may be a shortage or a need for replenishing, which indicates that prices will be rising. On the other hand if the industry is amply supplied with the right oil, there may be a price reduction expected. This is why it is important to have information on the situation of oil stocks in the world.
Information on product stocks can be as important as crude oil stocks. For example, crude oil stocks give an indication of the availability of crude to refineries in each country, and therefore are evidence on how well the refineries might provide the domestic market. On the other hand, information on low gasoline stocks before the driving season, or low heating oil stocks before the winter can be a warning signal to refineries, oil companies and governments that not only prices could rise, but shortages might possibly occur – e.g. heating oil problems experienced in autumn 2000.
What are primary, secondary and tertiary stocks ?
Primary stocks are held by the various companies supplying the markets : ranging from producers, refiners to importers. They are held in refinery tanks, bulk terminals, pipeline tankage, barges and coastal tankers (if they stay in the same country), tankers in port (if they are to be discharged at port) and in inland ship bunkers. Additionally stocks held for strategic purposes by governments (e.g. US SPR) or by stockholding organisations (e.g. EBV in Germany) are included in the primary stock category.
Secondary stocks are stocks in small bulk plants (marketing facilities below a certain capacity e.g. 50,000 bl in US, which receive their product by rail or truck) and retail establishments.Tertiary stocks are stocks held by final end-consumers, they can be power plants, industrial entities or consumers in the residential/commercial sector.
What data should be collected ?
Only data on primary oil stocks should be reported in the Joint Oil Data Exercise, for several reasons:
- The most important data on stocks are primary oil stocks. These are stocks held by producers, refiners, importers, stock holding organisations and strategic stocks. The oil in pipelines or in rail tank cars, in truck tank cars etc which are necessary to keep the supply system operational are of a lesser interest – they cannot be used as otherwise the supply system would break down.
- Data on primary oil stocks is the easiest to collect. Data for secondary and tertiary stocks are rarely collected, as they are very difficult to obtain. The reason for this is that there are often too many retail stations, or small bulk plants in the country, and certainly the number of end-users from which data would need to be collected is enormous. However, despite the lack of information, secondary and tertiary stocks can be very important, as they sometimes undergo large fluctuations, e.g. households heating oil tanks are rapidly depleted when weather is cold; retail stations stocks can be considerably run down when a tax increase is expected. in many countries, there is no distinction made between secondary stocks. Please note that terminology can differ.
- Information on primary oil stocks is consistent with the definition of “consumption” or to be more precise, “sales”, which includes only sales or deliveries made by refineries and importers (i.e. primary suppliers), secondary and tertiary stocks should not be included.
The following table lists the main categories to be included and not be included under Primary Oil Stocks :
What should be included ?
- Oil in refinery tanks,
- In bulk terminals,
- Pipeline tankage
- Barges and coastal tankers (when port of departure and destination are in the same country)
- Tankers in port *
What should not be included ?
- Oil not yet produced,
- in pipelines,
- in rail tank cars,
- in truck tank cars,
- in sea-going ships bunkers,
- in retail stores and service stations,
- in bunkers at sea,
- military stocks
Stocks held on board incoming ocean vessels in port or at mooring should be included irrespective of whether they have been cleared by customs or not. Exclude stocks on board vessels at high sea.
Location of Stocks
Stocks are to be reported on a national territory basis: this means that all oil held within a country geographically is to be reported, irrespective of the ownership of the oil. For example, oil held in the Netherlands ARA zone for the benefit of German companies is to be included in the Netherlands report, not in the German oil stocks.
Whether the stocks are held onshore of offshore does not make a difference as long as they are held on the national territory.
Timing / Cut-off date
Stocks of crude oil and petroleum products are volumes in storage at a particular time. For oil stocks to be consistent data with other oil flows, a monthly basis is chosen. As example, sales of oil products are reported on a monthly calendar basis, that is why it is important to also measure stocks on a monthly basis. Stocks are therefore considered at the beginning (1st) and end of each month (i.e. on 30th for a short month, on 31st for 31-day months).
The stock changes are measured as Closing stocks minus Opening stocks. The opening stocks on 1st of each month should equal the closing stocks of the previous month. A positive number indicates that stocks have increased during the month. A negative number for stock change shows a stock decrease.
Confidentiality of Stocks
In most countries stock data are publicly available. However, in a few countries, stocks are still considered confidential; they are regarded as valuable commercial information, upon which competitors may act.
Given the importance of knowledge of stock levels, both for national purposes, and for international market analysis, it is of crucial importance that data on oil stock levels and changes be reported for all countries.
There are several reasons why the stock data requested in the Joint Oil Data Exercise should not treated confidential. Firstly, because the level of aggregation of stocks asked for this exercise, i.e. on national level, does make it difficult to consider it as commercial information. There is no disaggregation by owner, i.e. oil company, refinery or distributor, nor is there a disaggregation by location site.
Secondly, the time lag between the reporting time and the time that the information would be made available is too long to make it sensitive commercial data, worthwhile for competitors to react. The oil industry usually acts on up-to-date information, and information on oil stocks more than one month old would no longer be considered up-to-date.