More questions on energy data

cush2[1].jpg How much oil is really in those tanks?

The Wall Street Journal reported today that regulators may be looking at whether energy marketers have been reporting false crude oil data in order to “influence perceptions about crude-oil supply and demand.”

“Among other things, regulators are concerned that companies may be reporting inventory levels that benefit their own trading positions but that may not be accurate, people familiar with the regulators’ thinking say.”
Another concern is whether companies conduct some physical oil sales and purchases solely to influence short-term pricing on oil futures markets.
The CFTC is taking depositions, or testimony, about some of those periods, lawyers say.”

A broad investigation of oil trading has been underway for quite some time, so it sounds like this is a particular direction that has evolved from that broader effort.
The question of the validity of energy data has been coming up quite a bit lately. As we’ve blogged about repeatedly there are questions about whether traders have been accurately classified as commercial participants in energy markets or speculators.
And the natural gas trading business had a huge problem with false trading data reports to publications that used those numbers to create widely-followed indexes. Two former gas traders were sentenced for such a case just last month.
The claims in the WSJ story that the data reported to the Energy Information Administration may not be accurate raised some hackles in D.C. today:

“Sept. 4 (Bloomberg) — U.S. Energy Secretary Samuel Bodman today defended the reliability of market data supplied to the Energy Information Administration and said he was unaware of a probe of participants providing false information.
The Wall Street Journal reported today that the Commodity Futures Trading Commission is examining whether certain players provided false data to the EIA, the statistical arm of the Energy Department, to benefit their trading positions. Bodman spoke to reporters after giving a speech in Washington.
The agency would not confirm or deny the investigation. Earlier this year the commission took the unusual step of announcing a nationwide investigation into the trading, purchase, shipping and storage of crude oil.
“The CFTC has already announced one enforcement action in the crude oil markets that resulted from the agency’s nationwide crude oil investigation and these investigative efforts are ongoing,” Ianthe Zabel, an agency spokeswoman, said in an e- mail. “Ensuring the integrity of the futures markets is critical, particularly in the energy sector given the impact energy prices have on all consumers.”
A spokesman for the Energy Information Administration said the EIA has shared information with the regulator, without specifying individual company data.
“We believe our data is reliable,” said Jonathan Cogan, a spokesman for the agency. The EIA gets its data from bulk terminals, refineries and pipelines, he said.
“Although we don’t do a physical audit of the inventory data we are collecting data on the supply, we are able to do edit checks and follow up on data that is anomalous,” Cogan said in an interview. “We do not have the capacity to do a physical inventory audit.”

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