The EIA Petroleum Status Report provides information on the weekly change in petroleum inventories in the U.S., whether produced locally or abroad. This weekly report gives an overview of the level of crude reserves held and produced by the U.S. both domestically and abroad. It is an indicator of current oil prices.
The level of inventories reported in the EIA Petroleum Report helps investors to estimate the prices for petroleum products. Just like any other goods and services, prices for petroleum products are determined by supply and demand. Therefore, during the times when economy is booming, demand for petroleum products will be robust. In view of the inverse relationship that exists between the inventory level of petroleum and the price of petroleum, prices of petroleum are most likely to increase when reserves are low and vice versa. Volatility of oil prices will affect businesses in the oil and refining industry like BP (BP), Exxon Mobil (XOM), Valero Energy (VLO) and Sunoco (SUN).
Second, the report also gives insights into the direction of inflation. As crude oil is an important commodity in the global market and plays a crucial part of the economy, fluctuation in its prices have a direct influence on consumer prices. Whenever oil prices have risen (dropped), consumer prices have accelerated (decreased). As such, if low reserves are reported, crude oil prices are most likely to increase and therefore, driving up consumer prices as well.
See also: EIA Natural Gas Report