Internet Problems May Affect DoE Data Release; The Way Oil Is Priced.

In reviewing those 2004 developments in the energy business which will have implications for what will happen in 2005, the APS research unit pointed to a warning from the US Department of Energy (DoE) on Tuesday Dec. 21 that distribution of closely watched US petroleum inventory data may experience hiccups on Wednesday morning due to problems with Internet service in Washington. Market makers always await the Wednesday report to price paper oil, which in turn influences the Brent price at the IPE in London, and that sets prices for physical crude oils worldwide.

The Dec. 21 warning was sent by DoE's statistics arm, the Energy Information Administration (EIA), whose report on petroleum inventories, production, imports and demand every Wednesday is the world oil market's most price-sensitive set of data, as it provides one of the only timely looks at market fundamentals. Oil prices can move sharply if the report's results differ from what traders are expecting. The report is released at 10:30 am EST Wednesdays.

DoE headquarters and many other federal agencies in the District of Columbia saw their Internet access and e-mail communications interrupted in the evening of Monday, Dec. 20, due to "major problems" experienced by their Internet service provider, the EIA said in a note. The EIA on Dec. 21 said Internet service was restored in the afternoon on that day, but the DOE and its service provider could not rule out further disruptions. As a result, the EIA said it was to back up its usual Internet-based release of the data by simultaneously passing out hard copies at DoE headquarters and having staffers read out key numbers over the phone.

The Internet problems also disrupted the EIA's efforts to gather data for the petroleum and gas reports from respondents who communicate with the agency by e-mail or Internet. Later the EIA said that information was gathered and there was no problem with the compiling of the data. On Dec. 22 the EIA issued its report on time: US crude oil inventories in the previous week to Dec. 17 rose 2.1m barrels to 295.9m; distillate stocks rose 600,000 to 119.9m barrels; heating oil inventories were flat at 49.9m barrels; and gasoline stocks were up 1.8m to 211.4m barrels. Immediately oil prices crashed, which surprised even the most prominent experts on NYMEX because US heating oil stocks were still about 13% below year-ago levels; and it was really cold in the US North-East, which accounts for 80% of American heating oil consumption.