Unaccounted For Crude Oil
Definition - What does Unaccounted For Crude Oil mean?
Unaccounted For Crude Oil is the difference between the calculated amount of crude oil supplied to an entity and the calculated amount of crude oil disposed by the same entity. The calculated amount of crude oil supplied refers to the crude oil production by an entity plus crude oil imports minus the stored amount of crude oil in storage tanks this entity has.Similarly, the calculated amount of crude oil disposed refers to any crude oil losses, the amount of crude oil converted into petroleum products that are exported, and crude oil burnt to produce petroleum products.
Petropedia explains Unaccounted For Crude Oil
Unaccounted crude oil is referred to as “adjustments” by the Energy Information Administration which publishes the stock levels of crude oil in the United States weekly. It serves as an important parameter in calculating the expected weekly stock change.
The formula below works to find expected stock change that will occur in crude oil.
Stock Change = Domestic crude oil production + Net imports of crude – Crude oil input to refineries.
The amount of crude oil supply is represented by domestic production and net crude imports whereas, crude oil input to refinery represents amount of crude oil needed by the refinery to convert it into refined petroleum products.
However, in order to determine the expected stock change, the unaccounted for crude oil or adjustments needs to be considered. This adjustment comes when refineries use crude oil from storage tanks along with the crude oil supplied to the refineries. Thus, a refinery does not convert complete amount of crude oil it imports, rather store some amount and use already stored crude along with fresh batch of crude.
Consider the following example to understand the adjustments or unaccounted for crude oil.
- Domestic production = 8512000 Barrel
- Net imports = 7721000 barrels
- Total supply = 16233000 barrels
- Crude oil inputs to a refinery = 16587000 barrels
Now from this total crude oil supply, subtract the crude oil inputs to refinery to get an expected stock change, i.e., 16587000 – 16233000 = 354000 barrels.
However, we need to add certain unaccounted crude oil value that can be obtained from a refinery to get the actual stock change, so suppose adjustments are 532000 barrels.Therefore, the final value for expected stock change will be 354000 + 532000 = 886,000 barrels.