The US Energy Information Administration (EIA) has gone live with a new set of pages on “What Drives Crude Oil Prices.” Of course, supply and demand factors are front and center. But what’s new is the inclusion of pages on the role of Financial Markets. True to its role as an information provider, the EIA is only reporting the facts, not hawking a line. There’s no startlingly new information on these pages. It is mostly a compilation of data otherwise available from the CME group on futures trades, from the CFTC’s Commitment of Traders report and other sources. But, the effort to put these together and within the larger picture of supply and demand forces is a worthy one, and an important step for the EIA.
These pages are one output of the EIA’s Energy and Financial Markets Initiative that Richard Newell instituted when he became Administrator.
My favorite product of the Initiative is one of the first ones. The EIA now publishes confidence bounds on price forecasts. These are produced using implied volatilities from exchange traded options. The full analysis of volatility, including confidence bounds is here. This is an important step forward in raising the level of public discussion.
The EIA is a very valuable source of data on US and international energy markets. There is nothing comparable anywhere else in the world, which is a shame. Unfortunately, it’s a fact of life that information costs money, and budget cutbacks are affecting the EIA, too. So it is unclear how much of the EIA’s new Initiative will last. I have my fingers crossed.