Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

Fudge Factor in U.S. Crude Oil Trade Data?

Economics / Crude Oil Dec 11, 2010 - 07:09 AM GMT

By: Andy_Sutton

Economics

Best Financial Markets Analysis ArticleFor many years now this column has been periodically dedicated to the analysis of economic reports, and the exposure of ‘fudging’ that takes place in most macroeconomic data series. Immediately upon looking at this morning’s trade data it seemed that, once again, something was amiss. It probably jumped out at me because I had just finished a crude oil analysis report for December’s Centsible Investor and the information was still fresh in my mind. However, I am quite sure that I am not the only one who noticed this.


In Exhibit 17 of this morning’s Foreign Trade Report, found on the Census Bureau’s website, the report claimed that the United States imported 9.656 million barrels per day (mbpd) in September of this year. The report goes on to assert that October’s level was 8.209 mbpd. The crude in question sold for an average cost of $72.36, and $74.18 per barrel in September and October respectively. This accounts for a $2.1 Billion decrease in our crude oil import bill from September to October.

This struck me as odd, especially considering the higher relative price and the drastic nature of the drop in imports, so I took a look at the EIA’s (Energy Information Administration) data for the same periods. The EIA reported average (derived from the weekly import numbers) daily imports of crude oil of 9.06 mbpd in September and 8.74 mpbd in October; certainly not the drastic drop purported to have existed in the Census Bureau’s data. The average prices for that oil, according to the EIA, were $71.71 and $75.84 per barrel in September and October respectively. Not a big deal, right? What’s a few cents here and there? Well, it turns out when the numbers are totaled up that, according to the EIA, our oil import bill for September 2010 was $19.49 Billion, and our bill for October was $20.55 Billion, an increase of nearly a billion dollars!

What’s the Big Deal?

Regardless of why this discrepancy exists, it important that it be exposed. We can dispute the validity of data from either group. Obviously the EIA doesn’t actually go out and dipstick every storage tank from sea to shining sea each week. I’ll readily admit that. And the Census Bureau? I’m not sure they could count much of anything at this point since they’ve laid off most of their temporary help (yes, the Census Bureau is actually the subgroup of the Commerce Department that compiles and releases FT900 – the Foreign Trade Report). Perhaps there is a difference in methodologies by the two groups. Again, the reasons aren’t as important as the results. These discrepancies in reporting are a big deal because of the takeaway messages and bias that the media applies to the data. In this case, the message is clear: The economy is primed for growth and the lower trade deficit will provide the fuel. Here’s a brief sampling…

From Bloomberg…

“It is good news all around. The deficit is down as exports are up, oil imports are down, and nonoil imports rebounded moderately. The overall U.S. trade deficit in October shrank to $38.7 billion from a revised $44.6 billion shortfall the month before…. The decrease in goods imports was led by a $1.7 billion drop in industrial supplies with the crude oil subcomponent down $2.3 billion.”

From MarketWatch…

“The U.S. trade deficit narrowed sharply in October, surprising economists and suggesting that the trade sector may make a positive contribution to growth in the fourth quarter for the first time since the final three months of 2009…. The value of U.S. crude-oil imports fell to $18.88 billion in October from $20.96 billion in September despite a rise in the price of a barrel of oil to $74.18 from $72.36 in the previous month. The quantity of crude imports fell to 254.5 million barrels from 289.7 million in September.”

So once again, the average person is confused. They’re hearing that our imported oil bill is decreasing; yet anything they buy that is made from or with oil is going up steadily. Another component in this report that I’ll leave for another time is the food component. A closer look at the data reveals that food price ‘inflation’ contributed quite a bit to the nominal dollar gain in exports in October’s data. This doesn’t purport well for growth anywhere, but is yet another (un)intended consequence of Central Bank quantitative easing.

By Andy Sutton

http://www.my2centsonline.com

Andy Sutton holds a MBA with Honors in Economics from Moravian College and is a member of Omicron Delta Epsilon International Honor Society in Economics. His firm, Sutton & Associates, LLC currently provides financial planning services to a growing book of clients using a conservative approach aimed at accumulating high quality, income producing assets while providing protection against a falling dollar. For more information visit www.suttonfinance.net

Andy Sutton Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules