The U.S. crude oil market is one of the most important and transparent markets in the world, as it provides timely and reliable data on production, consumption, imports, exports, and inventories. These data are collected and published by the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy. The EIA’s data are widely used by market participants, analysts, policymakers, and researchers to understand and forecast the supply and demand dynamics of the U.S. crude oil market.

However, the EIA’s data are not perfect, and they often contain errors and inconsistencies that need to be corrected and reconciled. One of the most persistent and puzzling problems in the EIA’s data is the discrepancy between the measured supply and demand of crude oil, which results in a large and positive adjustment factor that is used to balance the crude oil equation. The adjustment factor, also known as “unaccounted for” crude oil, represents the difference between the total supply (domestic production plus net imports plus stock changes) and the total disposition (refinery inputs plus net exports plus stock changes) of crude oil. Ideally, the adjustment factor should be close to zero, indicating that the supply and demand of crude oil are in balance and that the data are accurate and consistent. However, in reality, the adjustment factor is often far from zero, indicating that there are missing or misreported barrels of crude oil in the data.

The adjustment factor has been a chronic issue in the EIA’s data for many years, but it has become more severe and frequent in the past two years, as the U.S. crude oil market has undergone significant changes due to the shale revolution, the lifting of the export ban, the COVID-19 pandemic, and the OPEC+ production cuts. The adjustment factor has been mostly positive since 2019, meaning that the measured disposition of crude oil has exceeded the measured supply of crude oil, implying that there are more barrels of crude oil leaving the system than entering the system. The adjustment factor has also reached record-high levels, exceeding 2 MMb/d in some weeks, which is equivalent to about 15% of the U.S. crude oil production. These large and positive adjustment factors have raised questions and concerns about the quality and reliability of the EIA’s data and the underlying causes of the discrepancy.

The EIA has acknowledged the problem and has conducted a 90-day study to investigate the sources and solutions of the adjustment factor. The study, which was completed in February 2021, identified four main causes of the discrepancy:

1) timing differences between the weekly and monthly data sources;

2) measurement errors and estimation methods for crude oil production;

3) reporting errors and estimation methods for crude oil exports; and

4) reporting errors and estimation methods for crude oil stocks.

The study also proposed several actions and recommendations to improve the accuracy and consistency of the data, such as:

1) enhancing the data collection and validation processes;

2) updating the estimation models and assumptions;

3) expanding the coverage and frequency of the data sources; and

4) increasing the communication and collaboration with the data providers and users.

The EIA’s study and actions are expected to reduce the magnitude and frequency of the adjustment factor and to improve the quality and credibility of the U.S. crude oil data. However, the adjustment factor will not disappear completely, as there will always be some degree of uncertainty and variability in the data. The adjustment factor will remain a useful indicator of the data quality and a potential signal of the market conditions. Therefore, it is important for the data users to understand and monitor the adjustment factor and to interpret it with caution and context.