A Trading Edge: Digital Fuel Data Accelerates Energy Market Insights

Like all market investors, energy traders rely on data to guide their judgments of where demand and prices are headed. Among their tools are several weekly reports, including the Petroleum Status Report from the U.S. Energy Information Administration (EIA), which updates crude oil and gasoline inventory levels each Wednesday.

The EIA survey is the energy consumption snapshot most traders watch to gauge what might happen next in the oil markets. If inventories are down, it means refiners will need to make more product. If stockpiles rise, it suggests a slowdown in demand. Either way, a surprise from the EIA in petroleum, gasoline, diesel, or other liquid usage can mean energy prices will move — perhaps quickly.

Professional investors also look more broadly to place their bets, whether they are trading in today’s market or via futures contracts. Energy traders focus on everything from Organization of the Petroleum Exporting Countries (OPEC) pronouncements to weather forecasts to get a jump on supply and demand outlooks. Traders look at oil rig activity through the Baker Hughes Rig Counts and get industry data from the weekly American Petroleum Institute report. Some investors study oil tanker movements or use aerial photography to glean the amount of oil in storage tanks. All represent long-standing practices, and all constitute, at some level, a best guess at what might happen next in the market for a global commodity. There are few absolute secrets — so if everyone relies on the same 10:30 a.m. Wednesday EIA report no one’s got an edge.

 

Timelier data fuels a trading edge

Here’s where some energy traders and risk analysts get early insight. Through digital data tracking, it’s now possible to monitor shipments of refined petroleum products from terminals to the wholesale and retail markets. This is much closer to real-time demand information on a national, PADD, pipeline, city, or state level than the weekly EIA report, which looks backward by up to seven days.

In the United States, oil products, including gasoline and diesel, move from refineries to storage depots or racks on their way to retail customers. Those racks — about 1,200 nationwide — represent the last stop in the energy supply chain for bulk products. When trucks leave the depot, they open up space in the tanks. Therefore, the pace of drawdown becomes an accurate proxy for demand. Traders can use that information to assess what producers will do next — whether refineries might need to scramble to throttle back or run harder — and how those actions will impact pricing on exchanges and elsewhere.

DTN tracks sales for 85% of the refined fuels market and delivers a detailed report daily in the pre-dawn hours showing demand activity.

DTN^® can provide traders with this type of data as it already tracks oil terminal transactions for suppliers. Beyond traders, those in marketing and sales for major suppliers can also benefit from market share insights. Suppliers already know their own sales volumes, but to accurately set pricing and manage inventories, they must understand broader demand. DTN tracks sales for 85% of the refined fuels market and delivers a detailed report daily in the pre-dawn hours showing demand activity for a variety of petroleum products. This puts DTN clients potentially days ahead of the EIA survey results.

“What we’re showing is what depletion from the supply chain looks like,” explained DTN Product Manager Aaron Lingnau. “We’re showing what product left the facility, so as a trader, you’re able to understand what is really going on in the United States and what the demand patterns look like. Are these refiners going to have to make more product? What products do I want to hedge against, or what products do I want to bet on?”

 

Unique insights into profitable opportunities

Because the daily DTN report is national in scope, it offers insights unavailable elsewhere and can be an early warning signal for surprise changes in the marketplace. Lingnau said the DTN Refined Fuels Demand data report recently picked up on a significant change in energy demand ahead of the EIA survey. The government report showed continued strong oil sales, but anyone looking at the DTN report saw surprisingly meager activity, suggesting weak product demand. The reverse happened in April 2023. In each case, as in others, Lingnau said watchful traders could adjust their bets to take advantage of a market in flux.

“This isn’t statistical modeling — it’s actual transactions. If you know demand is going crazy in the U.S. for whatever reason, you’ll know how to play the trade.”

In another instance, the DTN report identified a regional anomaly in western New York, which suddenly experienced a diesel fuel shortage. Suppliers needed to backfill product by rail from Chicago, which created potential trading opportunities for anyone watching closely. “Traders don’t care if prices are going up or down,” said Stephen Gloyd, a commercial lead account manager at DTN. “Traders crave leading indicators that signal market direction, whether fundamental or technical. They make all their money in volatility. They can short the market or go long. We’re tracking 85% of the U.S. market at the point of lift right at the terminals. This isn’t statistical modeling — it’s actual transactions. If you know demand is going crazy in the U.S. for whatever reason, you’ll know how to play the trade.”

Looking for an edge in the fuels market? The key is to have access to accurate data — ideally before everyone else. With daily digital tracking of refined fuels demand, traders can have that edge.

Discover your trading advantage in the fuels market with demand data.